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NJ Supreme Court Rules On Causation Required In Spill Act Claims

This week, the New Jersey Supreme Court issued a decision in New Jersey Department of Environmental Protection v. Dimant, where the high court was asked to consider the level of causation needed to find a party liable for environmental cleanup costs under the New Jersey Spill Compensation and Control Act. The “Spill Act,” a predecessor to the federal “Superfund” law, is a New Jersey statute that enables the State and private parties to pursue dischargers of hazardous substances for cleanup costs and damages resulting from environmental contamination.

In the Dimant case, the State pursued a dry cleaning facility (among others) for groundwater contamination in Bound Brook, Middlesex County, New Jersey. Back in 1988, investigators inspected the Sue’s Clothes Hanger facility and found an exterior pipe slowly leaking a liquid that contained high levels of chlorinated solvents typically used in dry cleaning operations. Importantly, the State took no samples beneath the pavement where the liquid was seen dripping. Nor was any evidence presented to show if and how the dripping liquid contaminated the subject groundwater area in Bound Brook. Armed with only their observation of a leaking pipe--and having never returned to further investigate this potential source of groundwater contamination--the State brought a Spill Act claim against Sue's, its owners and others in 2004, many years after the discharge was first observed.

The NJDEP believed that its observation of the leak was enough to warrant cleanup costs and natural resource damages against Sue’s because, the State argued, “it is sufficient to show a nexus between the substance discharged and its appearance in the environment to warrant relief under the Spill Act.” While prior cases have alluded to the level of causation required to prove a Spill Act claim, the State Supreme Court had not previously addressed this issue, which is not clear from the statute itself.

Ultimately disagreeing with the NJDEP’s interpretation of the causation requirements, the State Supreme Court held that “a party in Sue’s circumstances must be shown to have committed a discharge that was connected to the specifically charged environmental damage of natural resources – groundwater damage – in some real, not hypothetical, way. A reasonable nexus or connection must be demonstrated by a preponderance of the evidence.” In other words, mere observation of hazardous substances being discharged from a facility in the vicinity of a groundwater plume—even a plume composed of similar substances—does not relieve the NJDEP (or a private party suing for contribution) of its obligation to prove that the discharge was reasonably linked to the contamination. The Court, in dicta, offered some thoughts on how this nexus might be demonstrated.

Importantly, the Court stated that proof of a hazardous discharge alone—like Sue’s leaking pipe—could be sufficient evidence in an action for injunctive relief to abate the discharge. 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.” In this case, the NJDEP could have—but did not—required Sue’s to immediately investigate the leaking pipe and to identify whether it was a case of groundwater contamination. Having failed to do so, the NJDEP could not charge Sue’s with cleanup costs and damages when the State offered no evidence that Sue’s discharge migrated to the groundwater and actually caused or contributed to the contamination found there.

The Dimant case offers property owners and the regulated community an important lesson should they be confronted with Spill Act liability, or if their property has been or becomes impacted by an off-site source. Showing the occurrence of a discharge of a hazardous substance will not itself be enough to prove a Spill Act claim. The parties to such an environmental litigation must carefully evaluate whether a sufficient nexus exists between the discharge and the contamination.

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