New Jersey’s Spill Act is similar to, but older than, CERCLA and like CERCLA, many of its contours have yet to be defined. The New Jersey Supreme Court’s unanimous decision in NJDEP v. Dimant (No. 067993 Sept. 26, 2012), attempts to rectify that in two important areas.
Dimant concerned an action by the New Jersey Department of Environmental Protection (“NJDEP”) to recover the amounts incurred in investigating and remediating PCE-contaminated groundwater. One of the potential contributors was a prior owner of a nearby laundromat/dry cleaner, Sue’s Clothes Hanger (“Sue’s”). The evidence presented against Sue’s was that, approximately 10 years earlier, the NJDEP determined that a pipe coming from Sue’s was dripping PCE onto the asphalt pavement behind its store. No action was taken at the time, however, and there was no evidence that the drip was anything other than temporary or incidental, or that the PCE had entered the soil rather than evaporating on the pavement. Nevertheless, in 2010, the NJDEP brought suit under the Spill Act against Sue’s, among others, arguing that Sue’s was jointly and severally liable for all costs expended in remediating contamination in nearby private wells.
Both the trial and the appellate courts found that the NJDEP had failed to meet its burden of proving, by a preponderance of evidence, that the discharge from Sue’s contaminated the groundwater. At issue before the Supreme Court was: (a) whether the dripping from the pipe constituted a “discharge” under the Spill Act in the absence of proven damage resulting from the drip and (b) what level of proof was necessary to establish a nexus between the discharge and the remediation costs.
As to the first issue, the Supreme Court held that, under N.J.S.A. 58:10-23.11b, a release of hazardous substances within New Jersey constitutes a “discharge” under the Spill Act even if it cannot be shown that “damage may result to the lands, waters or natural resources” of the State. Rather, that qualifying language, where it exists, only relates to discharges that may occur outside of New Jersey but result in harm within its borders. The Court’s holding that a threat of damage to the State’s natural resources is not required for discharges occurring in the State is important because it permits the NJDEP to seek injunctive relief, as well as require site investigations, upon a mere release, actions which are critical to the purpose of the Spill Act. Under that definition, the dripping from Sue’s pipe constituted a “discharge” subject to the Act.
But that did not end the inquiry. The right to recover remediation costs requires more than just a determination of whether a release occurred, as recovery can be had only if the damage – the costs incurred – resulted from the discharge. After a thorough review of the legislative history, as well as analysis of other relevant cases, the Court held that while a plaintiff need not prove that the discharge was the “proximate cause” of the damage, it must prove more than the minimal “some connection” required under CERCLA. Recognizing that “[n]either the Spill Act nor its corresponding legislative history definitively address the level of causation needed to impose liability on a discharger,” the Court held that “all liability under the Spill Act is not tied to a static causation nexus.” Thus, for the imposition of liability for remediation costs, a party “must be shown to have committed a discharge that was connected to the specifically charged environmental damage of natural resources . . . in some real, not hypothetical, way.” Further, that connection “must be demonstrated by a preponderance of the evidence.” “[I]t 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.” The Court summarized, “on proof of the existence of a discharge, one can obtain prompt injunctive relief under the Spill Act. However, in an action to obtain damages, authorized costs and other similar relief under the Spill Act there must be shown a reasonable link between the discharge, the putative discharger, and the contamination at the specifically damaged site.” Under that standard, the Court agreed with the lower courts that the evidence presented against Sue’s failed.
Dimant is now likely to become one of the most, if not the most, cited cases in interpretation of the Spill Act. No doubt plaintiffs will rely on the fact that they need not prove that a discharge proximately caused damage, while defendants will insist that a “reasonable” link must be established, and that meeting the minimal burden imposed under CERCLA is not enough. How those competing arguments will affect the outcomes of future cases is still left to be seen.