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Court Does Not Buy The “It’s My Consultant’s Fault” Argument, Affirms Penalties Against PRP for Sampling Failures

In a recent environmental case decided by the New Jersey Appellate Division, the court upheld a $20,000 penalty assessment against a leading South Jersey fuel oil company for failing to engage in proper sampling after an underground storage tank containing gasoline was found to have leaked.  The appeals court was not persuaded by the responsible parties' “it's my consultant’s fault” argument.

The case, titled New Jersey Department of Environmental Protection v. Nanak Auto Fuel, Inc., was decided late last week.  At issue were claims by the NJDEP that the two oil companies (Nanak Auto Fuel and Ross Fogg Enterprises) ignored several directives requiring that the oil companies sample and monitor a residential water filtration system after leaks were identified at a gas station.  The station was located near homes, whose potable drinking water sources were threatened by the leak. The NJDEP issued several directives, which were apparently not satisfied or not completely satisfied, by the companies.  After several warnings, the NJDEP fined both companies $8,000 in one assessment, followed by a second assessment for $20,000.  An administrative law judge upheld the penalties, finding that they were much lower than what could have been assessed and that the two companies had essentially done too little, too late.

An appeals court upheld the administrative law judge’s decision.  In particular, the appeals court rejected the companies' argument that the failure to submit sample results was caused by the environmental consultant that the companies hired to do the work.  The court held that this responsibility belongs to the companies and the companies had to make sure that the work was being undertaken.  The court affirmed the penalties.

Why is this important? The Appellate Division's decision appears to limit the ability of a company with specified environmental obligations to avoid liability because a hired consultant did not perform all of the required work.  This means that if a responsible party has specified environmental responsibilities, that party must ensure that its obligations are fully satisfied.  It may not be a legal defense that a consultant fails to fully perform the obligations delegated to him or her by the responsible party.

In short, if you are required or promise to undertake certain environmental obligations, you need to make sure that your consultant fully performs in accordance with NJDEP directives, rules and regulations.  If not, you -- and not the consultant -- will be held responsible in the eyes of the NJDEP.

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