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Appeals Court Allows Strict Liability Claims to Proceed Against Large New Jersey Refinery

For years many New Jersey lawyers understood that the mere storage of petroleum was not an abnormally dangerous activity. That is an important concept because those who engage in abnormally dangerous activities are strictly liable for harm coming from those activities, independent of fault. This is called strict liability and for decades oil companies have successfully avoided this type of liability in New Jersey. But that has changed.

Late last year the Appellate Division re-ignited this discussion in the case of NJDEP v. Hess. The case asserted cleanup and natural resource damages claims concerning a large refinery operation in New Jersey. The trial court dismissed some of the NJDEP’s claims, including a claim based on strict liability due to abnormally dangerous activity – that being the operation of a large refinery which allegedly had historic compliance issues. On appeal, the claim based on strict liability was re-instated.

The trial court had ruled that “ [s]ince New Jersey’s courts have not found the storage and processing of crude oil and refined petroleum products as an ‘abnormally dangerous’ activity . . . the . . . claim for strict liability must . . . fail.”

The Appellate Division disagreed with the motion judge’s conclusion and held that the storage and processing of petroleum, to the extent allegedly undertaken by Hess on its property, was an abnormally dangerous condition for which strict liability may be imposed. This marks an important turn relating to the liability of New Jersey oil refiners. It means they can be held legally accountable for environmental harm they create, even if they are not negligent in doing so.

The appeals court observed that the refinery operations at issue were very large: an oil refinery and storage facility that was established in 1958, covered 210 acres adjacent to public waterways, and, at which, over the years, “there have been numerous spills and leaks . . . that caused injuries to . . . natural resources” and exposed people to “hazardous substances and pollutants” that “have been linked to lasting effects on the human central nervous system and respiratory tract, blood disorders, and other serious health conditions.

The Court held that the State’s allegations about Hess’s operations sufficiently stated a cause of action for common law strict liability. Hess’s operations constituted an abnormally dangerous activity for purposes of maintaining a claim of common law strict liability against Hess. The extent of the operations, its proximity to sensitive waterways and environmental areas, and the danger of the pollutants allegedly used in Hess’s operations that were discharged, albeit unintentionally, satisfy the criteria for imposing strict liability, the court ruled.

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