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New Jersey Spill Act Requires Causation for Liability According to State Supreme Court

Companies with current or former operations in New Jersey, particularly those with operations situated on industrial properties and contaminated sites, have a new means to make the New Jersey Department of Environmental Protection (NJDEP) prove up responsibility for site contamination before joint and several strict liability may attach under the New Jersey Spill Compensation and Control Act (Spill Act). In a decisive unanimous opinion, the New Jersey Supreme Court recently held in NJDEP v. Dimant that the Spill Act requires a “reasonable link between the discharge, the putative discharger, and the contamination at the specifically damaged site.”

The case involved an action by NJDEP to recover investigation and remediation costs from a dry cleaning business for groundwater contamination. Dry cleaning companies and owners of commercial shopping centers and strip malls are frequent targets of environmental cleanups and investigations due to spills and releases of the dry cleaning solvent perchloroethlyene (PERC or PCE), and its degradation compounds trichloroethylene (TCE), dichloroethylene (DCE), and related components. Cleanup levels in groundwater around the country frequently range from 1 part per billion (ppb) to 5 ppb. Hence, even relatively small spills and releases of PCE have the potential to trigger cleanup requirements. But in this case, it was not enough for NJDEP to allege small drips of PCE onto the asphalt could result in Spill Act liability because the state never presented sufficient evidence of how the drips resulted in contamination of groundwater.

It is not enough, wrote the court, simply to prove that a defendant produced a hazardous substance and that same substance was found at the contaminated site such that the fact finder must connect the dots. Rather, 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. A reasonable nexus or connection must be demonstrated by a preponderance of the evidence.”

While the case should level the playing field in negotiations with NJDEP over cleanup and response costs, the court did clarify that the state can obtain prompt injunctive relief based only on the existence of a discharge. In another partial victory for NJDEP, the court clarified that the state need not prove proximate cause, as such a standard would thwart the public purpose underlying the statute. And finally, the court affirmed that there is “no de minimis exception to the Spill Act’s prohibition against the discharge of a hazardous substance.”

Companies with current or former operations in New Jersey will want to familiarize themselves with how the Dimant decision may impact strategy and negotiations with NJDEP. Although liability will continue to be fact dependent, and each case potentially different, the Dimant decision may represent welcome news for those seeking additional leverage in negotiations with NJDEP.