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Forsgate Industrial Complex, L.P. v. Leggett & Platt, Inc.

2006 WL 2587637 (N.J. Super. Ch. Div. 2006) (Unpublished)

ENVIRONMENTAL LIABILITY; SPILL ACT — Because the Department of Environmental Protection has broad powers to enforce the Industrial Site Recovery Act, a claimant engaging in industrial activity at a neighboring property causing contamination on its own property must first seek adjudication from the Department as to whether a Covenant Not to Sue issued by the Department shields the alleged polluting property owner before a claimant can seek adjudication by a court.

Twenty years earlier, a company triggered the Environmental Clean-up Responsibility Act [now known as the Industrial Site Recovery Act (ISRA)]. When triggered, ISRA requires the property to undergo an environmental audit and to meet applicable soil and ground water contamination limits through a remediation plan. The New Jersey Department of Environmental Protection (DEP) has authority to oversee such remediation plans. In 2005, the DEP issued a No Further Action Letter and a Covenant Not to Sue (CNS) to the company. The covenant specifically indicated that the CNS would not apply to the company if the company violated the Spill Compensation and Control Act (Spill Act).

An neighboring industrial complex filed a complaint alleging that industrial activity at the company’s property caused contamination in the soil and ground water on its own property. The complaint was brought under the Spill Act, which permits a party to recover against the responsible party for the costs it incurs for the investigation or remediation of contamination. The industrial complex moved to compel the company to remediate the environmental contamination originating from the company’s property. It argued for compensation to cover both past and future costs of investigation and remediation of the contamination on its own property. The company filed a motion for summary judgment. The Chancery Division denied it, finding that there were material factual issues in dispute. It dismissed the industrial complex’s claim as well, finding that the DEP had the requisite technical expertise to appropriately review the allegation of environmental contamination. The Court pointed out that the DEP had twenty years of experience determining the presence of contamination and remediation plans. It determined that the industrial complex could sue if the DEP refused to intervene within a reasonable time. Accordingly, the Court held that the facts of the case supported deference to agency jurisdiction.

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