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Legal Updates for Environmental Law

April 11, 2017
Presented by the Environmental & Toxic Tort Litigation Practice Group

Restoration Versus Remediation

By Lila Wynne, Esq.

Recently, the New Jersey Department of Environmental Protection (NJDEP), its commissioner and the administrator of the New Jersey Spill Compensation Fund sought both damages in the form of remediation as well as primary restoration. Their demands for natural resource damages relate to “primary restoration,” which the state defines as returning groundwater to a pre-discharge state, i.e., pristine condition. Typically, PRPs responsible for conducting a remediation are obligated to remediate groundwater under the supervision of NJDEP and in accordance with its regulations until groundwater meets groundwater quality standards. For example, groundwater quality standards established by NJDEP for methyl tertiary butyl either (MTBE) is 70 parts per billion (PPB), which, according to NJDEP, is a human health-based criterion, and is groundwater that poses no risk and is safe for human consumption.

Typically, a PRP is already remediating a contaminant in groundwater down to the GWQS and often times continues to decline through natural attenuation, which is defined as biodegradation and dispersion. This is often referred to as “Monitored Natural Attenuation” or “MNA.”

Under controlling New Jersey case law, where a PRP is remediating groundwater in accordance with the regulations, and where the remediation has or will satisfy the applicable GWQS and has or will return the water to pre-discharge condition, primary restoration damages are only available when the state can establish a need to speed up the process. These damages may only be sought where there is an injury or threat to human health, flora or fauna that provides a reasonable basis or justification for an expedited remediation strategy. N.J. Dept. of Envtl. Prot. v. Essex Chem. Corp., No. A-0367-10T4, 2012 N.J. Super. Unpub. LEXIS 593, at *19 (App. Div. Mar. 20, 20120; N.J. Dept. of Envtl. Prot. v. Union Carbide Corp., No. MID-L-5632-07, Slip Op. at 7 (Law Div. Mar. 29, 2011); In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., No. 1: 00-1898; MDL 1358 (SAS; M21-88, 2014 U.S. Dist. LEXIS 20676 at *11-12 (S.D.N.Y. Feb. 18, 2014) (Ridgewood MTBE).

When primary restoration damages are sought in environmental cases, the defense should move for summary judgment, arguing that the plaintiffs must establish by a preponderance of the evidence that there is an impact or risk to human health or the environment that justifies expending remediation activities which will result in the imposition of significant cost on the defendants.

The issue of primary restoration damages was addressed in two New Jersey cases. In the first case, NJDEP v. Essex, the New Jersey court addressed primary restoration damages in the context of groundwater contamination. Essex previously owned and operated a paper products preparation facility. For over 20 years, Essex conducted a soil and groundwater remediation program at this site, which was done with the oversight and approval of NJDEP. Thereafter, the state filed an action against Essex that included claims under the Spill Act to recover natural resource damages. The state of New Jersey sought $5.7 million in primary restoration damages for implementation of the NJDEP’s preferred remediation plan for returning the property to its pre-discharge condition in a more timely manner, as well as $2.3 million in compensatory damages.

Offsite groundwater remained contaminated, but it was expected to reach pre-discharge conditions due to the remediation technologies employed at the site. The trial court held that NJDEP was not entitled to primary restoration damages because it failed to demonstrate a need to expedite remediation beyond what was already occurring at the site. The court stated:

Although there has been an injury to the groundwater itself, the contamination has not affected any flora or fauna nor has it affected the health and/or safety of the people of the State. Primary restoration efforts made by Essex have been approved by SRP and have been shown to be effective. There is no compelling reason as to why remediation of this particular site should be expedited.

On appeal, the Appellate Division affirmed, holding that the state failed to present sufficient justification for imposing primary restoration class on Essex for implementation of NJDEP’s expedited remediation plan. The state also failed to show that it would be harmful to implement the company’s plan. In addition, the Appellate Division held that the state’s experts did not establish that their analysis for determining compensatory damages would impose costs on Essex reasonably related to injuries caused by the site contamination. Therefore, all primary restoration damages in Essex were denied.

Similarly, in NJDEP v. Union Carbide Corp., the trial court denied primary restoration damages for the same reasons. In Union Carbide, the responsible party was remediating contaminated groundwater under the supervision of NJDEP. The plaintiff’s litigation experts opined that a $500,000 primary restoration plan was required that would return groundwater to pre-discharge conditions in only eight to nine years. The trial court denied NJDEP’s claim for primary restoration damages.

When defending natural resource damages claims, it is important to note that there is no statute or regulation authorizing the state to demand that natural resources be returned to pre-discharge conditions as quickly as possible, and the Spill Act is actually silent on the way to calculate natural resource damages.

 

Private Parties Left Holding the Bag When It Comes to Pre-1977 Contamination

By Kevin T. Bright, Esq.

The New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11, et seq., provides a comprehensive mechanism for allocating financial responsibility for the investigation and remediation of contamination among all responsible parties. Enacted in 1977, the Spill Act was amended in 1979 to make it retroactively apply to pre-enactment contamination. Until recently, this included contamination that was caused by any person or entity, including the state of New Jersey.

In a recent decision, the New Jersey Supreme Court exempted the state of New Jersey from Spill Act liability for actions that pre-dated enactment of the law. In NL Industries, Inc. v. State of New Jersey, Docket No.: A-44-15 (March 27, 2017), the Supreme Court held that, although the state could be liable for contamination that resulted from state action that occurred after enactment of the Spill Act, the state could not be responsible for pre-enactment contamination on the basis of sovereign immunity.

In NL Industries, the plaintiff sought contribution from the state of New Jersey for remediation costs it incurred at a site in the Laurence Harbor region of Old Bridge Township. NL Industries’ claims were premised upon the state’s acquiescence in the early 1970s to the placement of contaminated “slag” manufactured by NL Industries on land partially owned by the state.

In January 2014, the EPA demanded that NL Industries remediate the site. Thereafter, NL Industries filed a state court complaint seeking contribution from the state under the Spill Act, alleging that the state caused or contributed to the contamination in its roles as regulator and riparian landowner.

In its motion to dismiss, the state argued that its sovereign immunity precluded such a claim. On this issue, the trial court denied the state’s motion, finding that the Spill Act provides “a clear and unambiguous waiver of the state’s sovereign immunity.” This was based on the fact that the state was specifically listed as a potentially liable “person” under the Act and the legislature did not “immunize or exclude” the state from the list of potentially responsible parties when the Spill Act was amended in 1979 to allow for contribution claims. The trial court also relied on Department of Environmental Protection v. Ventron Corp., 94 N.J. 473 (1983), for the proposition that the Supreme Court previously recognized a legislative intent that the Act be applied retroactively. The Appellate Division affirmed for substantially the same reasons.

On appeal, the New Jersey Supreme Court reversed based upon a finding that the Spill Act contained no clear expression of a legislative intent to waive the state’s sovereign immunity retroactively to cover periods of state activity that occurred prior to enactment of the Spill Act. The court noted that, although the Spill Act included the state within its definition of “person,” the 1979 amendment—making the Act retroactively applicable—failed to include any specific provision indicating that the legislature sought to abolish the state’s sovereign immunity for pre-enactment discharges. Absent specific legislative intent to that effect, the state was entitled to sovereign immunity. The court also held that the Ventron decision did not provide support for the plaintiff’s argument since Ventron’s holding was limited to actions brought by the state against private parties.

In his dissenting opinion, Justice Albin expressed his disagreement with the majority’s view. Justice Albin’s dissent was based primarily on the legislature’s failure to differentiate between the state and private parties when defining the term “person.” As a result, Justice Albin argued that both the state and private parties should be treated equally, regardless of whether the basis of the action was for pre- or post-enactment contamination. Justice Albin further relied on Ventron, which established retroactive strict liability against any “person,” since the definition of that term expressly includes the state. Justice Albin noted the “absurd result” under the majority’s opinion in cases where both the state and a private party are jointly responsible for a pre-enactment discharge. Because of the Spill Act’s joint and several liability provisions, the private party would be 100 percent responsible for the entire clean up, even when the state is 90 percent or more responsible for the actual discharge.

 

The material in this law alert has been prepared for our readers by Marshall Dennehey Warner Coleman & Goggin. It is solely intended to provide information on recent legal developments, and is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We welcome the opportunity to provide such legal assistance as you require on this and other subjects. To be removed from our list of subscribers who receive these complimentary Environmental Law updates, please contact ktbright@mdwcg.com. If however you continue to receive the alerts in error, please send a note to ktbright@mdwcg.com.  

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Affiliated Attorney

Lila Wynne
Co-Chair, Environmental & Toxic Tort Practice Group, NJ
(856) 414-6026
ltwynne@mdwcg.com
Kevin T. Bright
Associate
(856) 414-6057
ktbright@mdwcg.com

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