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White Oak Funding, Inc. v. Winning

341 N.J. Super. 294, 775 A.2d 222 (App. Div. 2001)

ENVIRONMENTAL LIABILITY—Unintentionally allowing prior and unknown environmental contamination to migrate and spread underground does not constitute the “releasing” of hazardous substances under the Spill Act.

The operators of a photocopying service purchased property formerly used for a fuel oil distribution business. It knew about the prior business and it also knew there had been an above-ground oil tank that had been removed prior to its purchase of the property. The photocopy business conducted no environmental testing prior to its purchase. It “did not consider the possibility of any contamination problem from the former fuel oil business.” Eventually, it sold the property to a florist. The florist failed and its mortgage went into foreclosure. The buyer of the property at the foreclosure sale subsequently learned that the property was contaminated. Expert testimony was to the effect that the contamination existed at the time the photocopy business purchased the property and that limited environmental testing would have revealed the contamination. Expert testing was also to the effect that “without remediation efforts, fuel oil contamination will become more extensive and widespread over time.” Under that theory, the contamination migrated and spread, such that by the time the florist purchased the property, the contamination was more extensive and widespread than when the photocopy business had originally purchased it. Under the Spill Act, “[a]ny person who has discharged a hazardous substance, or is in any way responsible for any hazardous substance, shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs no matter by whom incurred.” Under the Act, “discharge” means “any intentional or unintentional action or omission resulting in the releasing, spilling, leaking, pumping, pouring, emitting, emptying or dumping of hazardous substances into the waters or onto the lands of the State.” The buyer at the foreclosure sale contended that the photocopy business operators were liable as dischargers because they “committed an unintentional omission resulting in a releasing of the fuel oil during their ownership of the property.” The omission, according to that theory, consisted of the “utter failure to conduct environmental due diligence before purchasing the property, and subsequent failures to report the contamination to DEP or take any steps to contain the spreading fuel oil.” The buyer at the foreclosure sale looked to the definition of “release” in the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The Court, however, rejected that definition as being broader than that encompassed in the Spill Act, holding that the definition in CERCLA was more expansive than in the Spill Act. “If it had been the legislature’s intent to include within the scope of the statute a continued flowing or issuing out of past discharges, then the statutory definition would so state.” Consequently, the Court held that, “[i]mposition of Spill Act liability as a discharger requires some act or omission of human conduct which causes a hazardous material not previously present to enter the waters or land.”

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