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NJ Supreme Court: Environmental Litigation Over Cleanup Cost Allocation May Proceed

 Sets New Environmental Law Precedent

New Jersey's highest court has ruled that in private contribution claims arising under the Spill Act, "a party determined to be a discharger and held responsible for the cost of cleanup by the DEP is entitled to bring a contribution claim against other potentially responsible parties before the final tally of cleanup costs." Today's decision in Magic Petroleum Corp. v. Exxon Mobil Corp., -- N.J. -- (2014) answered the open question of whether a company (or individual) responsible for cleaning up contaminated property must await state approval of its cleanup plan before suing others also believed to have contributed to the contamination. This was a critical question because the environmental investigation and remediation of a contaminated property can take many years and involve substantial expense. Now, parties engaged in environmental clean ups can rest assured that they may immediately pursue contribution from others who are also responsible for the contamination.

The case before the New Jersey Supreme Court related to the cleanup of a gas station located in Millstone Township, New Jersey. At issue were two adjoining gas stations. One was previously an Exxon station and one was operated by a company called Magic Petroleum. When the New Jersey Department of Environmental Protection (DEP) filed administrative actions against Magic Petroleum to compel the a cleanup of a regional gasoline spill, the company in turn filed a lawsuit in New Jersey Superior Court alleging that Exxon Mobil was in fact responsible for most of the cleanup costs. The trial court found that Magic Petroleum's "contribution" case was premature because the state DEP had not yet approved a final cleanup plan for the site. The trial court believed that allocation of liability between Magic and Exxon would be more accurate if adjudged after the DEP performed its role in overseeing investigation and cleanup. The appellate court, relying on the doctrine of primary jurisdiction, affirmed the dismissal and stated that any party seeking contribution must obtain DEP's written approval of a cleanup plan for filing a contribution claim.

Property Owners Need Not Wait to Sue Those Responsible for Contamination

In today’s ruling, the State Supreme Court held that a party who incurs cleanup and removal costs may immediately pursue a claim for contribution against other parties responsible for the contamination. This right to pursue contribution lawsuits grows out of the express language of New Jersey Spill Compensation and Control Act (Spill Act), as well as common law (as codified in the Joint Tortfeasors Contribution Law and the Comparative Negligence Act). The court determined that primary jurisdiction was not applicable and that "plaintiff property owners or other responsible parties are permitted to file contribution claims in Superior Court, and a court may allocate liability before the final resolution of a site remediation plan by the DEP." In finding that a DEP-approved remediation plan was not a prerequisite to filing a contribution claim, the high court noted the distinction between (1) an allocation of liability and (2) the total amount of cleanup costs. While recoverable 'cleanup and removal costs' may include only those approved by the DEP, a court may allocate a percentage of responsibility for a particular site. Thus, the court concluded that a "trial court may determine, subject to proofs" whether one or more dischargers are responsible for contamination and "may assign liability to responsible parties, based on evidence presented at trial."

Today's decision provides clarification for the regulated community. Those engaged in the often expensive endeavor of investigating and remediating environmental contamination do not need to defer their efforts to obtain contribution from other potentially responsible parties.

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