In an unpublished decision, the Appellate Division of the Superior Court of New Jersey recently ruled that the NJDEP was required, but failed, to undertake formal rulemaking before imposing liability under several NJDEP regulations that govern radon measurement and mitigation activities.  NJDEP v. Radiation Data, Inc., Docket No. A‑1777‑17T3 (N.J. App. Div. Oct. 9, 2018).

In Radiation Data, defendant appealed from NJDEP’s final agency decision (after seven days of hearings) finding defendant liable for violating several requirements relating to the certification of radon testers and mitigators under the Radiation Protection Act, N.J.S.A. 26:2D-1 et seq. and relevant implementing regulations, N.J.A.C. 7:28-27.1 et seq.. On appeal, defendant argued that NJDEP’s Radon Section, which administered the state’s radon program, was wrongfully imposing regulatory standards upon defendant without adopting those standards through formal rulemaking processes. Specifically, the court determined that NJDEP had deviated from the text and stated intent of the radon measurement regulations by making defendant responsible for approximately 450 “affiliate” technicians not employed or controlled by defendant. Defendant further alleged that plaintiff was impermissibly enforcing an internal NJDEP “Guidance Document” as a mandatory rule without the required public notice and comment.

The Appellate Court affirmed in part, reversed in part and remanded in part. The court found that NJDEP was required, but failed, to undertake formal rulemaking for imposition of liability for the conduct of “affiliates” and for enforcing the informal “Guidance Document” concerning quality assurance and control plans as a mandatory rule, without the necessary public notice and comment.  The court held that NJDEP was obligated to undertake public notice and comment to make explicit that it intended to hold certified measurement businesses liable for the conduct of independent contract field tests rather than to require the agencies that employed such testers become certified measurement businesses. The court found that such liability was not apparent from the text of the regulations. With regard to the “Guidance Document,” the court observed that it added requirements not found in the adopted regulations or set forth specific requirements where regulations were more broadly written. Therefore, the court found that the NJDEP intended for the document to operate as an unpromulgated rule and remand was necessary for a determination as to which parts of the Guidance Document required formal rulemaking.

The court declined to vacate certain regulatory violations against the defendant since defendant’s measurement functions did not depend on activities of “affiliate” technicians, and were within defendant’s realistic ability to control.

NJDEP has proposed major amendments to the Stormwater Management rules at N.J.A.C. 7:8. (50 N.J.R. 2375(a)).  One of those proposed amendments, if adopted, will prevent or severely limit a developer’s ability to incorporate non-structural stormwater management strategies such as stormwater detention basins in a development. Instead, the developer will be required to utilize “green infrastructure” best management practices (“BMPs”).  One of the best definitions of green infrastructure comes from American Rivers:  “Green infrastructure is an approach to water management that protects, restores, or mimics the natural water cycle.”

The stated rationale for the amendments are that stormwater detention basins that collect surface water runoff from development-wide drainage areas, particularly runoff from paved or developed surfaces that prevent or limit rainfall infiltration, do not “mimic” the natural water cycle.  Nor are they as efficient at removing total suspended solids as smaller scale green infrastructure BMPs.

The proposed rule intends to replace non-structural strategies with green infrastructure that meets standards for groundwater recharge, stormwater quantity and stormwater runoff quality.  Table 5-1 of the proposed regulation lists such Green Infrastructure BMPs which include cisterns, dry wells, grass swales, green roofs, manufactured treatment devices, pervious paving systems, small-scale bioretention systems, small-scale infiltration basins, small-scale sand filters and vegetative filter strips.  The proposed rules do provide for waivers from strict compliance under specified circumstances.

There is a sixty day comment period and many comments are expected.  This proposal is a major change to existing practices and likely will increase development costs and result in the loss of developable land in any major development project.

Last week, the Attorney General and the Commissioner of the New Jersey Department of Environmental Protection held a press conference to announce the filing of eight new environmental enforcement actions. Targeted sites include Camden’s Puchack Wellfield Superfund Site, the Fillit Corp. site in Palmyra, 323 North Olden Ave. in Trenton, the Novick Chemical site in Newark, Tirpok Cleaners in Flemington, and gas stations in Newark, Camden and Phillipsburg.

This is the State’s second round of environmental enforcement actions this year, following six enforcement actions filed in August. Press releases related to this announcement stylized the new actions as “Environmental Justice Actions.” Environmental Justice addresses the disproportionate impacts of environmental consequences on groups of people based on race, color, national origin, or income. Accordingly, the State’s press releases include the mean income and minority population percentage of the areas surrounding each new enforcement site.

In addition to announcing the newly filed actions, the State also announced the creation of an “Environmental Enforcement and Environmental Justice Section” in the office of the Attorney General. While statements at the press conference suggested that this section is something never before seen in New Jersey, in fact the section appears to be a recycled version of the short-lived Environmental Prosecutor’s Office created by Governor Florio in 1992 and eliminated by Governor Whitman in 1994. Regardless, the creation of the office clearly conveys the message that aggressive environmental enforcement will continue throughout the current administration.

The action concerning the Puchack Wellfield, a Superfund Site that the EPA has been overseeing since the late 1990s, is notable among those filed last week because it seeks natural resources damages for injury to groundwater. As alleged by the State in that action, “there are thousands of sites in New Jersey confirmed as having groundwater contaminated with hazardous substances.” The historic contamination at those sites will provide the new enforcement section with ample opportunity to seek natural resources damages in future actions.

The New Jersey Appellate Division recently ruled that a landowner’s lawsuit against a former attorney and environmental consultant could proceed to the discovery phase.  In CCM Properties, LLC, et al. v. Pieper, et al, the plaintiff engaged an environmental consultant to perform a ground penetrating radar survey of a property to determine whether any underground storage tanks were present.  The contract specifically stated that no historical analysis or soil sampling would be performed, and further stated that the proposed work did not satisfy New Jersey Department of Environmental Protection requirements.  The consultant performed the scan, found two USTs, and recommended their proper removal.  Despite the fact that an investigation meeting NJDEP requirements had not been performed, plaintiff’s attorney advised that “all issues regarding the purchase of the subject property [were] resolved,” inducing plaintiff to close on the property.  Three  years later, the bank, upon receiving plaintiff’s refinancing application, commissioned a Phase I report.  The Phase I report stated that, in addition to the two discovered USTs, the property once featured another UST and a 250,000 gallon above ground storage tank.  The bank denied the refinance application.  Three years after the Phase I report, plaintiffs filed suit based upon the findings therein.  In particular, plaintiffs leveled a malpractice claim against the attorney for advising them to take title after the ground penetrating radar survey, and malpractice and breach of contract claims against the consultant for failing to advise that further investigation was needed.

Soon thereafter, the defendants moved to dismiss the complaint, claiming that the statute of limitations had expired, and that plaintiff had failed to state a claim.  The trial court agreed.  The Appellate Division reversed.

The Appellate Division first addressed the attorney malpractice statute of limitations issue.  Noting that it is very difficult for lay persons to know that they have been injured until actual damage occurs, the Appellate Division held that plaintiff’s malpractice action did not accrue until it actually received the Phase I report that served as the basis of the bank’s denial.  Thus, the six year statute of limitations did not bar the attorney malpractice action.  The Appellate Division next turned to the consultant malpractice action, and held that that action was properly dismissed.  The Appellate Division observed that the contract precisely circumscribed the consultant’s duties.  The contract expressly stated that the ground penetrating radar survey did not meet NJDEP requirements, and imposed no duty to detect and advise of aboveground storage tanks, soil contamination, or prior use of the property.  Thus, the consultant malpractice action was properly dismissed.

The breach of contract claim against the consultant however, was not.  The Appellate Division noted that, at the initial stages of litigation, the plaintiff’s allegations are treated as true, and that even “obscure statements” that establish a cause of action will overcome a motion for dismissal.  In light of the foregoing, the Appellate Division held that the consultant’s failure to find a third UST supported a breach of contract claim, and that that cause of action could go forward.

For those in the market for potentially contaminated properties, this case highlights the importance of sound legal counsel when interacting with consultants and their work product.  For consultants, the case highlights the value of good drafting.

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.

On September 5, 2018, the United States Third Circuit Court of Appeals (“Third Circuit”) rendered a decision that could potentially implicate the NJDEP permitting process in future Natural Gas Act and other federal permitting actions.

In Township of Bordentown, et al. v. FERC, No. 17-3207 (3rd Cir.  September 5, 2018), the Third Circuit held that the New Jersey Department of Environmental Protection (“NJDEP”) could not deny the Petitioners the ability to request an adjudicatory hearing under the New Jersey Freshwater Wetlands Protection Act (“FWPA”) solely on the basis of preemption of the Federal Natural Gas Act (“NGA”). This opinion means that challengers have at least the right to request an administrative hearing for State-issued environmental permits, even for certain Federally-permitted projects. If a state environmental agency like the NJDEP were to grant such a hearing, this could significantly delay the commencement of a project.

By way of background, Transcontinental Gas Pipe Line Co. (“Transco”) proposed to upgrade its existing interstate natural gas pipeline system – including the construction of a new mater and regulating station, compressor station, and electrical substation along a lateral in Chesterfield, NJ – and conduct certain modifications in Mercer County, NJ (the “Project”). The Project required, and obtained, approvals from the Federal Energy Regulatory Commission (“FERC”) under the NGA. In addition, the Project is to be situated in freshwater wetlands and transition areas requiring the discharge of fill or dredge material into navigable waters, as well as a significant diversion of volumes of water. The discharge of dredge and fill material into navigable waters requires a permit pursuant to Section 404 of the Federal Clean Water Act , 33 U.S.C. 1341(a) (“CWA”). New Jersey has assumed permitting authority for certain navigable waters such as those involving the Project, which is implemented under the FWPA. Transco applied for, and obtained, a Freshwater Wetlands Individual Permit and Water Quality Certification.

Once NJDEP issued the permit, and pursuant to the FWPA, the Petitioners requested an adjudicatory hearing. NJDEP denied the hearing based solely upon the NGA’s requirement that the federal courts have exclusive jurisdiction to review the issuance of permits such that the state administrative hearing process is not applicable.

The Third Circuit concluded otherwise, and ruled that the administrative hearing process provided under state law is not precluded by the court’s exclusive jurisdiction under the NGA. In doing so, the Third Circuit reviewed the NGA and concluded that its jurisdiction is limited to civil actions, and not administrative proceedings. The Third Circuit also reviewed case law from the Supreme Court of the United States and other Federal Circuit Courts of Appeal, and concluded that the hearings at the administrative hearing level were not civil actions as referenced in the NGA, even if administrative proceedings mirror adversarial trials. Thus, the NGA “leaves untouched the state’s internal administrative process, which may continue to operate as it would in the ordinary course under state law.”

Depending on the Federal permitting process involved, applicants must consider the possibility that an administrative hearing may – and can, if granted – be considered as part of the timing of the state permitting process. The Third Circuit’s opinion, of course, is limited to the applicability of an administrative hearing in a state-permitting program delegated under a Federal statute, in this case the delegation of CWA authority to the NJDEP under the FWPA. However, the analysis of whether an administrative hearing is a judicial action can be read beyond its applicability to the FWPA. Each individual permittee applying under State law must always add a permit of time predicted for the hearing, if a hearing is granted, as part of its construction planning process. In addition, permittees may now want to vigorously oppose adjudicatory requests, as they can be used offensively by project challengers to delay a project.

It should be noted that the vast majority of the opinion provides a detailed analysis of FERC’s issuance of certificate of public convenience and necessity, and its subsequent analysis under the Federal National Environmental Protection Act (“NEPA”). The Third Circuit issues important conclusions regarding the applicability of a related intrastate project and its impact on the NEPA analysis. However, the important takeaway from this opinion is the applicability of the state administrative hearing process to state permits issued for Federal projects, and its impact on the timing of a project.

Effective August 6, 2018, the New Jersey Department of Environmental Protection (“NJDEP” or the “Department”) adopted amendments to several key rules governing site remediation—including Discharges of Petroleum and Other Hazardous Substances (N.J.A.C. 7:1E); Heating Oil Tank System Remediation Rules; Administrative Requirements for the Remediation of Contaminated Sites (“ARRCS,” N.J.A.C. 7:26C); and the Technical Requirements for Site Remediation (“Technical Regulations,” N.J.A.C. 7:26E).

While this rule adoption made many modifications to these regulations, we call two significant changes to your attention. The first involves the use of alternative fill materials at remediation and redevelopment sites, while the second concerns the expansion of the definition of “person responsible for conducting the remediation.”

Alternative Fill

Alternative Fill is material used in a remediation containing contaminants exceeding the most stringent cleanup standard applicable to a site. The amendments to both ARRCS and the Technical Regulations will result in NJDEP being more involved in many cases using alternative fill, requiring review and approval prior to its use on a contaminated site. Previously, NJDEP did not have such broad authority, which allowed the use of fill without the delays caused by NJDEP review.

If the person responsible for conducting the remediation (“PRCR”) proposes to import alternative fill that does not meet the requirements of the Technical Regulations (N.J.A.C. 7:26E-5.2(b), discussed below), then the PRCR must obtain prior written approval from NJDEP.

However, prior NJDEP approval is NOT required if alternative fill from an off-site source is imported to a site as long as the alternative fill meets the following requirements set forth at N.J.A.C. 7:26E-5.2(b), in that the alternative fill:

  1. Does not contain any contaminants not already present at the receiving area of concern (“AOC”) above the applicable soil remediation standard (“SRS”);
  2. Does not contain a concentration of any individual contaminant above the 75th percentile of that contaminant’s concentration in the receiving AOC; and
  3. Is not imported in excess of the volume necessary to restore the pre-remediation topography and elevation of the receiving AOC.

With respect to using alternative fill from an on-site source (i.e., moving contaminated material from one part of a site to another), prior NJDEP approval IS NOT required if the concentrations in the alternative fill are already present in concentrations above the applicable SRS at the receiving AOC. If the contaminants in the alternative fill are not above the SRS in the receiving AOC, then prior NJDEP approval IS required before using the on-site alternative fill.

In response to comments, NJDEP believes the potential to delay remediation is justified by preventing further contamination of sites through inappropriate use of alternative fill and associated additional costs (i.e., for its removal and possible penalties) for such inappropriate use. The NJDEP stated that “the person should communicate with the Department early in the remedial process so that the person does not expend significant time, resources, and capital without knowing whether the Department will approve the proposal” (Response to Comment 254; 50 N.J.R. 1754).

The NJDEP is not sympathetic to comments that the proposal is unduly restrictive. The NJDEP emphasized the “use of alternative fill is for the purposes of remediating a contaminated site, not for the development of that contaminated site.”

Definition of “Person”

The amended ARRCS rules now place responsible corporate officers squarely within the realm of enforcement liability, even under statutes which do not place them within the target of such liability. Given the specter of personal liability for certain corporate officers, they will need to be even more vigilant in ensuring their company’s compliance with environmental rules governing site remediation.

Specifically, the definition of “person” was broadened to include for the purpose of enforcement, “a responsible corporate official, which includes a managing member of a limited liability company or a general partner of a partnership” (N.J.A.C. 7:26C-1.3). Numerous comments to the rule proposal emphasized that New Jersey’s Spill Compensation and Control Act, and other similar environmental statutes do not include corporate officials or shareholders within the definition of “person.” One commenter noted well-established corporate law distinguishes between human beings acting in a personal capacity as distinguished when acting as a representative or agent of a corporate entity.

In response to the many comments it received to the amended definition, NJDEP argues its expanded definition of “person” is consistent with statutory language (including the Water Pollution Control Act, Solid Waste Management Act and Spill Act) and that there is a “need for a systematic and consistent approach to the detoxification” of contaminated sites in New Jersey (Response to Comment 255; 50 N.J.R. 1754). The Department further notes that the protections granted to individuals by the corporate form are not absolute.

For more information regarding the NJDEP’s amended site remediation regulations, please contact your CSG attorneys or the post’s authors.

In a recent decision, U.S. Masters Residential Property (USA) Fund v. New Jersey Department of Environmental Protection – Financial Services Element, the New Jersey Superior Court’s Appellate Division held that a claimant could not recover from the Spill Fund where contamination on the claimant’s properties was the result of historic fill and defuse anthropogenic pollution (“DAP”), not oil. The claimant owned several contiguous residential properties in Bayonne not far from Upper New York Bay and the Hudson River. During Hurricane Sandy, the properties and the surrounding area were flooded and inaccessible for days. When the floodwaters receded, claimant found staining from what it believed to be petroleum and/or hazardous substances on the interiors and exteriors of its buildings, and detected a petroleum odor emanating from the properties’ yards. Claimant claimed the floodwaters had carried petroleum or other hazardous substances from an offsite source onto its properties.

The New Jersey Department of Environmental Protection (“NJDEP”) disagreed. Soil samples from the properties revealed contamination from historic fill, not oil. Historic fill is contaminant-bearing material used to fill in low lying areas, usually consisting of coal, wood ash, dirt, and the like. Strictly speaking, contaminants found in historic fill are “hazardous substances” under the Spill Act. Further, the regulatory definition of historic fill describes what the “fill” is, but does not state when the fill must be deposited to qualify as “historic.” NJDEP construed the term “historic fill” to mean fill deposited before the Spill Act, or pre-1977. In accordance with its interpretation, NJDEP denied the claim while reserving its right to deny the claim on any other appropriate basis. The claimant sought arbitration.

At the arbitration hearing, NJDEP’s expert in analytical chemistry testified that the soil samples taken from the properties lacked tell-tale signs of oil contamination, chemicals called “aliphatics.” The soil samples also contained arsenic and lead, chemicals not commonly found in oil. NJDEP’s expert ultimately concluded that the soil sample results were indicative of historic fill and DAP, not oil. DAP consists of air pollution particles that fall onto the ground or water and accumulate over time. NJDEP, whose definition of DAP contains no time component, treated the finding of DAP as a per se sign of a pre-Spill Act discharge.

The claimant’s expert described a “petroleum odor” and “bathtub ring” he found at the properties, but offered no opinion regarding the missing aliphatics. The claimant’s expert also relied on news reports indicating that oil had been discharged in the general area of the properties in the course of the storm. Based on the analytical results, the arbitration judge found that Hurricane Sandy had stirred up DAP in local waterways and deposited the same on the properties. Accordingly, the arbitration judge denied the claim.

The Appellate Division affirmed the arbitration judge’s decision. The burden of proof was on the claimant to prove a post-Spill Act discharge, and the claimant had simply failed to make its case. The missing aliphatics, the inability of claimant’s expert to opine on the soil results, and the claimant’s failure to show that Hurricane Sandy had placed oil, not just in the area of, but specifically on the properties, all persuaded the Appellate Division that the arbitration judge’s denial was proper.

A lesson here is, when bringing a Spill Fund claim, claimants should have a good handle on their analytical results, and be sure that their contamination is from a spill, not fill. This is because, apparently, NJDEP has concluded that historic fill and DAP are per se pre-Spill Act discharges for which the Spill Fund is not liable. This is an intriguing position on several grounds. First, neither the definition of historic fill nor DAP have time components. Thus, the Department is taking an implicit leap that, if historic fill and DAP are found, they must be pre-Spill Act historic fill and DAP. Factually, this could be disputed, as, for example, coal, wood ash, dirt, and the like, could very well have been deposited after 1977. Second, NJDEP’s interpretation appears to be a rule of general applicability and continuing effect, meaning that the interpretation should have been promulgated through New Jersey’s rulemaking process. Finally, estoppel theories may apply as well. On the one hand, persons responsible for conducting the remediation are required to address historic fill, and according to NJDEP, should address DAP at their sites. On the other hand, NJDEP is indicating that the Spill Fund is not liable to pay claims for the very same kind of contamination. This asymmetry of treatment may open NJDEP’s interpretation to challenge. So another lesson is, if claimants must bring a Spill Act claim for historic fill and DAP, their claims may not be barred as a matter of law.

The EPA’s 2014 cooling water rule for existing power plants (40 C.F.R. pts. 122, 125) has survived challenges from both environmental and industry groups. The Second Circuit Court of Appeals upheld the contentious rule which allows for, among other things, case-by-case determinations of best technology available (BTA) required for minimizing adverse environmental impacts from cooling water intake structures (CWISs), finding that the rule was based on reasonable interpretations of applicable statutes and sufficiently supported by the factual record.

By way of background, once-through CWISs use tremendous volumes of surface water to dissipate heat from power plants. Fish trapped against the intake screens (impingement) or passing through the cooling water system (entrainment) can be injured or killed. Closed-cycle cooling systems use much less surface water and therefore impact fewer fish. Most existing power plants were built with once-through CWISs.

The rule allows for the Director of a state’s Clean Water Act permitting program to determine the BTA to limit entrainment on a site-specific basis. Environmental challengers argued that the rule should have identified closed-cycle cooling as the BTA. The Second Circuit disagreed, stating that the rule explains that closed-cycle cooling is infeasible at some existing facilities because of space constraints, emissions impacts arising from the additional energy requirements of closed cycle cooling, and the absence of net benefits associated with power plants nearing the end of their useful lives. Environmental challengers also argued that the cost of closed-cycle cooling should not have been considered in evaluating the best technology available. Again the Second Circuit disagreed, stating that EPA did not improperly consider costs, and that agencies are generally required to consider the costs and benefits of a regulation.

Regarding impingement, the rule identifies “modified traveling screens with a fish-friendly return” as the best technology available, rather than the closed-cycle cooling preferred by environmental challengers. Modified traveling screens are projected to achieve a 76% survival rate for impinged “non-fragile species.” Environmental challengers argued that the exclusion of fragile species was an arbitrary distinction. However, the Second Circuit accepted EPA’s “adequately supported” explanation that inclusion of fragile species masks the effectiveness of impingement technology, and that EPA’s data shows that mortality of fragile species depends on natural conditions rather than technology performance.

The Court also rejected a flurry of arguments relating to EPA’s site-specific process for evaluating impacts on endangered species, as well as the administrative law arguments advanced by industry challengers. Barring Supreme Court review, this decision marks the end of over 30 years of litigation regarding CWIS rules. Given the site-specific nature of the final rule, arguments previously used to challenge the sufficiency of the CWIS rules will likely now be used to challenge permits granted to existing power plants.

The Appellate Division of the Superior Court of New Jersey recently (in an unpublished opinion) applied the six year statute of limitations (“SOL”) for tortious injury to real property in barring plaintiff’s claim for permanent diminution in the value of its property. 320 Associates, LLC v. NJ Natural Gas Co., Docket No. A-1831-16T2 (N.J. App. Div. June 29, 2018). As a result, the neighboring property owner was unable to bring a claim for tortious injury to real property caused by the migration of coal tar contaminants from defendant neighboring property owner. Importantly, the court did allow plaintiff’s nuisance claim to proceed noting that if a nuisance can be abated, the failure to do so constitutes a continuing tort entitling plaintiff to relief and is not barred by the SOL.

In 320 Associates, the property owner, 320 Associates, LLC, owned a piece of commercial property located just north of defendant New Jersey Natural Gas Co.’s (“NJNG”) property. Plaintiff asserted that NJNG property was polluted with coal tar. The discharges on defendant’s property decades earlier from industrial operations had resulted in the migration of a coal tar plume onto plaintiff’s land causing damage.

Plaintiff stated in its complaint that it first learned of the migration of coal tar plumes onto its property in 2008. As a result of the newly discovered pollution, it could not sell its property to a current commercial tenant. Plaintiff further asserted that the pollution from NJNG’s land had decreased the value of plaintiff’s land and might negatively affect plaintiff’s future ability to either sell or lease the property. Damages were estimated at $2.5M. Based on these essential facts, plaintiff filed claims for negligence, negligence per se, strict liability, violation of the Spill Act, violation of New Jersey Environmental Rights Act, nuisance and trespass. In each count, the plaintiff sought the same relief, including damages for the lost sale or rental value of its property, and injunctive relief requiring NJNG to cleanup pollution on NJNG’s property and on plaintiff’s property.

The parties agreed that the applicable statute of limitations is the six year SOL for tortious injury to real property. N.J.S.A. 2A:14-1. The court confirmed the law axiom that ordinarily a cause of action would accrue when the right to institute and maintain a suit first arose. However, in environmental cases, under the so called discovery rule, a cause of action is found not to accrue until the injured party discovers, or by an exercise of reasonable due diligence and intelligence should have discovered that he may have a basis for an actionable claim.

The Appellate Division (in a de novo review) agreed with the trial court that the latest plaintiff learned about the condition was in 2008, therefore, the six year statute of limitations for a damages claim based on permanent diminution in the value of the property began to run in 2008 and expired in 2014 and therefore, was time barred. Additionally, the Appellate Court rejected plaintiff’s argument that the migration of contaminants constitutes a new “discharge” of pollutants every time it occurred. The court noted that the discharge of pollutants on defendant NJNG’s property occurred decades ago and therefore, the migration of those pollutants onto plaintiff’s land did not constitute a new discharge and therefore, the claims could not proceed based on the time bar.

Interestingly, the court reached a different conclusion with respect to plaintiff’s nuisance claim. Finding that since there was no dispute that defendant NJNG could have abated the contamination on plaintiff’s property, the failure to abate constitutes a continuing tort that entitles the plaintiff to relief and the applicable SOL did not bar plaintiff’s nuisance claim. The court further observed if the nuisance cannot be abated, there is no continuing tort, and the statute of limitations begins to run when the defendant creates the harmful condition. Finding these issues not ripe for the court’s consideration, the court found the trial court acted prematurely in dismissing plaintiff’s nuisance claim and remanded for the purpose of reinstating those claims and proceeding with discovery.

Property owners that have been impacted by contamination from a neighbor should consider bringing a nuisance claim for damages stating that the failure to abate the contaminants constitutes a continuing tort even though its other common law environmental claims may be time barred.

For more information or for a copy of this decision, please contact Michael J. Naughton at mnaughton@csglaw.com.