Does your business use chemicals in its operations?

By Julia A. LaVan, Esq.

If so, you are subject to New Jersey’s Spill Act, which establishes liability for environmental contamination. The Spill Act casts a broad liability net and a wide range of businesses use pollutants covered by the statute. It is vital that businesses stay abreast of the evolving legal framework. The New Jersey appeals court has recently decided a case that may have immense ramifications for environmental cleanup litigation.

New Jersey Appellate Division Pulls the Reins on Spill Act Litigation in N.J. Dep’t of Envtl. Prot. V. Dimant In Dimant, the Appellate Division delineated the outer scope of litigation under New Jersey’s Spill Act (N.J. Spill Compensation and Control Act, N.J.S.A. § 58:10-23.11 et seq.).1 The decision responds to growing attempts by plaintiffs to stretch Spill Act liability, and reaffirms the requirement that a causal connection exist between the defendant’s acts and the plaintiff’s damages. While Dimant does not necessarily change case law, it does clarify precedent and precludes an emergent argument being made by plaintiffs bringing suit under the statute.

There are two main theories on which to base recovery for environmental cleanup: negligence and strict liability. Negligence requires a showing that the defendant breached a duty of care owed to the plaintiff. It is by definition a fault-based form of recovery. Strict liability, on the other hand, is not founded on fault; recovery is imposed without regard to the defendant’s culpability. Strict liability is therefore a plaintiff-friendly theory. As a result, its use is largely limited to specific, statutorily defined acts.

The Spill Act—and CERCLA,2 its federal counterpart—establish strict liability for damage resulting from the discharge of a hazardous substance. Under both statutes, individuals or corporations can be jointly and severally liable. This means a single defendant can be held responsible for the entire recovery amount, even if multiple parties discharged hazardous substances and thereby all contributed to the damage.

In Dimant, the N.J. Department of Environmental Protection (DEP) brought suit pursuant to the Spill Act for cleanup costs of groundwater contaminated with perchloroethylene (PCE)3. DEP sued the defendant dry cleaning business because it released PCE onto its property during operations. The trial court, however, found no “nexus between any discharge by defendant … and the groundwater contamination at issue.” There were three

1.N.J. Dep’t of Envtl. Prot. V. Dimant, 418 N.J. Super. 530 (App. Div. 2011).

2.Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

3.Perchloroethylene, a derivative of Tetrachloroethylene, is a colorless liquid that has been classified as a carcinogen. The chemical is commonly used as the primary solvent in dry cleaning and as a degreaser in a host of manufacturing processes. When improperly discharged, it is absorbed into soil and eventually contaminates groundwater, presenting dangers to human health.

other dry cleaners in the immediate area and other potential sources of PCE discharge. In the absence of evidence showing that the defendant (as opposed to any of the other possible sources) actually contaminated the groundwater, the court ruled against DEP.

On appeal, DEP argued that the Spill Act’s strict liability provision makes the defendant liable for even a de minimus discharge, and that a direct causal link between the discharge and the damages need not be established. DEP relied on two Third Circuit cases that applied CERCLA to support the proposition.4 In those cases, “the Third Circuit articulated a less stringent standard to prove a ‘release’ of a hazardous contaminant … but it did not abandon the [nexus] requirement.” The Appellate Division therefore held that Spill Act recovery requires proof that the defendant caused, or at least minimally contributed to, the plaintiff’s damages.

Dimant does not, in fact, diverge from the court’s previous rulings. Indeed, it is firmly rooted in prior decisions. The Spill Act and CERCLA have always required a causation element. Those statutes merely relieve the plaintiff of the burden of proving that the defendant was at fault—that is, acted negligently. Dimant does, however, set the boundaries of Spill Act litigation by explicitly stating what state and federal decisions have said implicitly. The Spill Act will remain a broadly construed statute; “a party ‘even remotely responsible for causing contamination will be deemed [liable] under the Act.’” But a Spill Act “discharge” must result in an environmental effect, proven by a preponderance of the evidence.

N.J. Dep’t of Envtl. Prot. V. Dimant, 418 N.J. Super. 530 (App. Div. 2011).
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. § 9601 et seq.

Perchloroethylene, a derivative of Tetrachloroethylene, is a colorless liquid that has been classified as a carcinogen. The chemical is commonly used as the primary solvent in dry cleaning and as a degreaser in a host of manufacturing processes. When improperly discharged, it is absorbed into soil and eventually contaminates groundwater, presenting dangers to human health.

See United States v., Alcan Aluminum Corp., 964 F.2d 252 (3d Cir. 1992); see also New Jersey Turnpike Authority v. PPG Industries, Inc., 1997 F.3d 96 (3d Cir. 1999).

© 2011 LaVan Law

This Update is published by LaVan Law. It is provided solely as legal information, not legal advice. Legal advice depends, to a large extent, upon the particular facts of a matter. For legal advice, contact your legal advisor.

For more information, email Julie A. LaVan, Esq. or 856.235.4079