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Lacey Municipal Utilities Authority v. New Jersey Department of Environmental Protection

369 N.J. Super. 261, 848 A.2d 843 (App. Div. 2004)

ENVIRONMENTAL LIABILITY—In the case of a tank leak, a party may show that it is more likely than not that a leak would not have occurred before a certain date based because underground tanks retain their integrity for a period of time after installation.

A municipality’s well water supply was contaminated by reason of a leak in a gasoline station’s tank. In response, the municipality authorized its local utilities authority to extend the water-supply system into the contaminated zone. After the extension was completed, the utilities authority filed a claim with the New Jersey Department of Environmental Protection (DEP) pursuant to the Spill Compensation and Control Act (Spill Act), seeking reimbursement for the cost of water supply expansion. An arbitrator held that the water had been contaminated after the Spill Act became effective and that the utilities authority should be reimbursed. The owner of the gasoline service station appealed, arguing that the leak might have occurred before the Spill Act became effective.

The Appellate Division affirmed. Specifically, it was convinced by the utilities authority’s expert’s testimony that the gasoline service station’s tanks had been installed in 1966, prior the Spill Act’s effective date in 1977, and that such tanks typically did not leak or fail within the first 15 to 20 years of operation. Therefore, the Court held that the utilities authority successfully demonstrated that it had suffered damages as a result of a post-Spill Act discharge and that it had satisfied its burden by presenting evidence that it was more likely than not that the spill occurred in the mid-1980s, after 1977.

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