The Appellate Division has affirmed a $66,200 administrative penalty imposed by DEP against the owner of a shopping center constructed atop a closed municipal landfill. The unpublished and non-precedential decision in NJDEP v. Raritan Shopping Center LP found liability based on current ownership of the contaminated site, despite the landowner never discharging hazardous substances and conducting due diligence prior to purchasing.

Raritan purchased the property in 1993 after conducting environmental tests that discovered low levels of tetrachlorothylene (a common solvent also known as Perc) in the groundwater. The Perc was attributed to the closed landfill. In 2003, a prospective purchaser detected additional groundwater contamination, leading to the discovery and excavation of three buried steel drums. Thereafter, Raritan entered into an agreement to submit remedial reports to DEP. In 2004, Raritan submitted the required reports and requested a no-further action letter. DEP rejected Raritan’s request and instead requested submission of a remedial action workplan. In 2011, DEP advised Raritan of its remedial obligations. In 2014, DEP issued an administrative order requiring Raritan to remediate the groundwater contamination and assessing the $66,200 fine.

Raritan requested a hearing and the administrative law judge found in favor of DEP. On appeal, the Appellate Division affirmed based on a DEP regulation stating that Spill Act liability includes “subsequent owners of real property where the discharge occurred prior to the filing of [a no further action letter or response action outcome] with the Department.” N.J.A.C. 7:26C-1.4(a)(4). Curiously, the Appellate Division does not explain why DEP’s interpretation of Spill Act liability, a purely legal question, is entitled to deference. Rather, the decision cites to N.J. Schs. Dev. Auth. v. Marcantuone, 428 N.J. Super. 546, 559 (App. Div. 2012), which states that liability may exist for an owner who, unlike Raritan, purchased contaminated property without conducting due diligence. In this case, the innocent purchaser defense did not apply because Raritan’s due diligence detected the contamination.

Though unpublished, the decision demonstrates the Court’s deference to DEP’s expansive interpretation of environmental liability. Perhaps more practically, the case also demonstrates the prudence of remediating reported discharges while seeking contribution from those who discharged the hazardous substances.

Can groundwater discharges violate the Clean Water Act and require NPDES permits?  Two federal court cases coming out of the 4th and 9th Circuits dealing with the applicability of the Clean Water Act (CWA) to groundwater are creating real concern over how expansive the court’s holdings and application of the Act can be.  The decisions were rendered by US Court of Appeals for the 4th Circuit in Upstate Forever v. Kinder Morgan Energy Partners LP and the 9th Circuit in Hawaii Wildlife Fund v. County of Maui.

In each case, the courts held that groundwater can be regulated under the CWA when it acts as a conduit through which pollutants from a spill of hazardous substances, septic waste or injection can be traced to protected surface waters.  While the burden of proof is significant, if a nexus can be established between the contaminant detected in the surface water and groundwater where the release originally occurred, then exposure to CWA fines is real and the need for a National Pollution Discharge Elimination System permit appears to be required.  The 4th Circuit’s holding is even broader than the 9th Circuit in that it applies to residual or historic contamination.  In other words, if released contamination ever reaches surface water protected by the CWA, then it doesn’t matter when the spill contaminants were first released to the environment.

In the 9th Circuit case, the County of Maui has already informed the court that it will seek Supreme Court review and for good reason.  If upheld, these rulings have far reaching implications for not only regulated industries, such as oil and gas, but also private home owners with septic systems and municipalities with leaking sewer pipes.  Here in NJ, where there is a robust state regulatory program requiring remediation of discharges to the environment, CWA regulation will add another regulatory scheme to be considered and may end up regulating septic tanks, which are common in New Jersey, and other systems designed to release materials below ground level.  Releases, both recent, as well as historic, could create a set of liabilities no private citizen even remotely considered.   Moreover, these decisions could cause the New Jersey Department of Environmental Protection to require re-investigation and re-assessment of sites that have been remediated pursuant to state law to determine if a previously unaddressed contaminant pathway between groundwater and surface water exists.

It remains to be seen how EPA will integrate these decisions, if they stand, into practice.  Once it does, the question will become how state delegated clean water programs will be affected.

In a recent decision, Hawai’i Wildlife Fund v. County of Maui, the Ninth Circuit Court of Appeals held that a Clean Water Act (“CWA”) permit is required when pollution found in navigable waters is fairly traceable from point source discharges to groundwater.

The case involved Maui County’s discharges of treated sewage into four groundwater wells. That sewage seeps into the groundwater and, based on a tracer dye study, flows into the Pacific Ocean 84 days later and a half mile away from the wells. The Ninth Circuit held that the discharges require a CWA permit because (1) the wells were each a point source, (2) pollutants are fairly traceable from a point source to a navigable water, and (3) the pollutants reaching the navigable water are not de minimis.

The County primarily argued that indirect discharges do not require a CWA permit. The Court disagreed, relying on the plain language of the statute, which does not mention direct discharges, and Justice Scalia’s plurality opinion in Rapanos v. United States, 547 U.S. 715, 743 (2006), which favorably cites decisions requiring permits for other indirect discharges.

While the Ninth Circuit explains that its decision only imposes the same permit requirement the County would have faced had it constructed an outfall, future cases likely will be less clear. For now, operations discharging to groundwater should consider the likelihood of tracing non de minimis pollution to navigable waters when evaluating permit compliance.