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New Jersey Department of Environmental Protection v. Dimant

418 N.J. Super. 530, 14 A.3d 780 (App. Div. 2011)

ENVIRONMENTAL LIABILITY; SPILL ACT — Liability under the Spill Act must be proven by a preponderance of the evidence and a showing of nexus between the discharge and the damages resulting from that discharge.

An investigation uncovered contamination in many of the residential potable water wells near a brook. The main contaminant was a chemical used in both the dry-cleaning and automotive industries. Two other chemicals were present, both of which were degradation byproducts of the main contaminant, but also had various uses of their own. Within the affected area were a strip mall, two dry-cleaning businesses, a former gasoline station, and two federal Superfund sites. At least one unit of the three unit strip mall had been a dry cleaner. Decades earlier, the business operator had used a machine that utilized the main containment in a closed-loop system. Investigators focused only on this business and samples were never taken from a larger, neighboring dry cleaner because it used a petroleum-based solvent, although underground tanks were found leaking on the property soon afterwards.

Tests revealed that fluid coming from the smaller dry cleaner’s machines exceeded permissible levels, but that the fluid was draining into the sanitary sewer and not the groundwater. Those machines were decommissioned shortly thereafter, and the dry cleaner sealed grate holes behind the machines and dismantled the piping, effectively ending any possibility of further contamination.

More than a decade later, a Department of Environmental Protection (DEP) investigator found that the potable wells with the highest levels of contamination were located between the two cleaners. The investigator determined that one of the cleaners was the primary source, but also noted that the degradation by-products indicated that the contamination had been there for a long time. The cleaner’s expert disagreed, finding that the business was not in operation long enough for the contaminants to have migrated from their business operation to the first or nearest affected residential wells. Instead, he concluded that the contamination had come from the former gasoline station. The expert and the investigator disagreed as to the direction of the groundwater flow.

The DEP sought contribution from one of the cleaners under the Spill Act to cover costs incurred in relation to environmental remediation. The lower court found that the DEP had not established a nexus between that cleaner’s discharge and the contamination at issue. Despite the doctrine of strict liability for spills, the lower court noted that a nexus was still required. It found no nexus, in part because the contamination preceded the dry cleaning operation, and also that the investigator was unable to establish the source of the contamination because there were other alternative sources of contamination in the area.

On appeal, the Appellate Division noted that liability under the Spill Act must be proven by a preponderance of the evidence. The DEP argued that because the cleaner had allowed the contaminant to be discharged, it was strictly liable for all costs and damages associated with all of the contamination in the area. Thus, the DEP argued that even a de minimis spill imposes liability on all operators handling that product, and that a direct causal connection between the discharge and the damages need not be established. The DEP pointed to two federal cases under the companion federal Spill Act that it claimed were analogous; however, the Court discounted their value because both required some connection between the spiller and the contamination.

The Court noted that even though no previous New Jersey case had expressly required a nexus between a discharge and damages resulting from the contaminated discharge, such a requirement was implicit in the earlier holdings. The DEP had the burden to demonstrate that the cleaner had some connection to the damages caused by the contamination or had added to existing contamination. There was no proof, for example, that the cleaner’s asphalt driveway was cracked or eroded, or that the contaminated discharge had not evaporated soon after hitting the asphalt and before getting into the soil or groundwater.

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