No Need To Wait For NJDEP’s Approval When Seeking Contribution For Site Cleanups

Parties that find themselves responsible for the remediation of contaminated property in New Jersey do not have to wait for the New Jersey Department of Environmental Protection (“NJDEP”) to approve a final cleanup plan before seeking other responsible parties to contribute to cleanup costs pursuant to New Jersey’s Spill Compensation and Control Act (“Spill Act”).

The New Jersey Supreme Court, in Magic Petroleum Corp. v. ExxonMobil Corporation, recently held responsible parties may file contribution claims seeking to allocate liability even before the cleanup is complete.  The Court did, however, point out that although trial courts may assign liability based on evidence presented at trial, they cannot issue a final damages award until the cleanup is done.

Magic Petroleum, Inc. (“Magic”) had owned and operated a gas station, and the underground storage tanks had leaked petroleum and caused site contamination.  In a separate proceeding, the NJDEP sued Magic for costs incurred by NJDEP during the remediation of the gas station.  As the sole “Responsible Party” targeted by NJDEP, Magic was responsible for the entire cleanup cost.

Seeking to offset its remediation costs, Magic filed a lawsuit for contribution against Exxon Mobil Corporation (“Exxon Mobil”), the owner of a former gas station on neighboring property.  Magic claimed that contamination from that neighboring property migrated onto the Magic property.  Both the trial court and the Appellate Division dismissed Magic’s suit again Exxon, holding that while the court and NJDEP both have the ability to determine whether Exxon Mobil is a discharger, only NJDEP had the ability to identify the contamination, analyze the extent of the discharge, and develop a cleanup plan.  The Appellate Division went on to note that these issues must be addressed by the NJDEP before the court allocates liability.

Magic appealed to the New Jersey Supreme Court for relief.  The Court held that while the extent of the cleanup has yet to be determined, it agreed that the trial court can determine whether ExxonMobil is also a responsible party.  The Court explained that “the trial court may assign liability to responsible parties before obtaining NJDEP’s written approval of a remediation plan, based on evidence presented at trial, but … the court may not be able to issue a final damages award.”

The Court explained this distinction when it noted that while recoverable cleanup and removal costs may include only those approved by the NJDEP, a court may allocate a percentage of responsibility for the remediation costs at a particular site.

A site remediation can easily last many years, causing responsible parties to incur substantial expenses.  This ruling is important for two reasons.  Individual responsible parties are no longer forced to bear the full brunt of the cleanup costs until the remediation is complete and, in doing so, it promotes the prompt remediation of contaminated property.

Additionally, the Site Remediation Reform Act changed remediation projects by placing the bulk of oversight duties in the hands of Licensed Site Remediation Professionals (LSRPs) and retained only limited oversight responsibilities for the NJDEP.  Therefore, this case leaves open the issue of whether cleanup work and costs approved by an LSRP, and not by the NJDEP, can be recovered under the Spill Act as currently drafted.  This is a critical issue for parties engaged in cleanups, and it needs to be reviewed by the legislature, the NJDEP, or the courts.