Marsh v. New Jersey Department of Environmental Protection

A-7/8, 1997 WL 805309 (N.J. Supreme Court 1997)
  • Opinion Date: December 18, 1997

ENVIRONMENTAL LIABILITY; SPILL ACT—There is no de minimis exception to Spill Act liability. A person or entity that is liable under the Spill Act may not receive reimbursement under the New Jersey Spill Compensation Fund.

The New Jersey Spill Compensation Fund provides reimbursement to qualified claimants for cleanup costs associated with environmental contamination. Among other requirements, qualified claimants must have acquired the property without knowledge of the presence of hazardous substances on it. In addition, reimbursement is not available if the claimant was in any way responsible for the discharge of the hazardous substances.

In this case, the applicant acquired the subject property from her mother in 1991. From 1930 through 1974 three prior owners of the property, including the applicant’s parents, leased the property to operators of gas stations. In the course of further developing the property, the applicant came to believe that there might be underground petroleum storage tanks on the property. An engineering consultant’s firm examined the property and determined that there were two such tanks. However, in the course of removing the tanks, the consultant discovered that not only were the two tanks not properly sealed or filled, but that there were three additional tanks on the property and those additional tanks had leaked petroleum products into the soil. Further, it determined that at least one of the tanks was still leaking petroleum. The applicant spent about $41,000.00 to remediate the problem and was advised by the New Jersey Department of Environmental Protection and Energy that, in addition, she would have to install monitoring wells and sample ground water at additional cost. The applicant was unaware of the underground tanks until they were discovered by her environmental consultant. The property was never used as a gas station during the applicant’s ownership.

The applicant’s application for reimbursement funds was administratively denied based on the Fund’s argument that the applicant was disqualified by reason of: (a) being “in any way responsible for the discharge” because she owned the property while the discharge (from the still leaking tank) was occurring; or (b) because the applicant had not exercised due diligence in inspecting the property before acquiring it.

In response, the applicant contended that at the time she acquired the property, there was no obligation to conduct an inquiry into the presence of hazardous substances and that there is a de minimis exception with respect to discharges.

In response to the de minimis exception argument, the Supreme Court stated that although it expected that the government would not arbitrarily exercise its powers to assert claims against persons responsible for minimal discharges, there is no de minimis exception to the New Jersey Spill Compensation and Control Act. Following this reasoning, any person that owns property at the time that a discharge of hazardous substances is taking place is “in any way responsible for the discharge.” The Court’s premise was that an applicant may not collect cleanup costs from the Spill Fund if the applicant was responsible for those costs under the Spill Act. This analysis does not arise because of any lack of due diligence on the applicant’s part; or the applicant actively discharged any pollutants; it arises because the underground storage tanks leaked during its ownership of the property.

The applicant argued that laws first passed after its acquisition of the property impose a burden of requiring property owners to investigate the property prior to taking ownership demonstrate that, prior to passage of those laws, no similar duty existed. The Court rejected that interpretation, saying that to accept such logic would “turn the law on its head.” By rejecting this argument, the New Jersey Supreme Court interpreted the “new” investigative duty, not as “duty,” but rather as a “new defense” to Spill Act liability for owners who acquired their property after it had been contaminated and who could prove that they conducted such an investigation. The addition of a perspective defense that the applicant could not satisfy did not nullify the pre-existing provisions of the statute that imposed the liability in the first place.

Lastly, the Court, possibly in dicta, stated that whether the Department of Environmental Protection “would exercise its discretion to impose personal responsibility on ... a party to clean up past pollution is a different question from whether such a party may recover the costs of remediation from the Fund.”