To:Commission
From:JonAunio
Re.:MagicPetroleumv. ExxonMobil Corp. Date: July 11, 2016
MEMORANDUM ExecutiveSummary
ThecaseofMagicPetroleumc.ExonMobileCorp.addressestwoissuesthatidentifyareas ofthelaw in which statutorydraftingmight be ableto provide clarity. Those are:
•WhetherclaimsforcontributionundertheSpillActmustbedeferredunderthedoctrineof Primary JurisdictionuntilafinalresolutionbytheDepartmentofEnvironmental Protection; and
•WhetheritisnecessarytoobtainwrittenconsentoftheDepartmentofEnvironmental
Protection beforeproceedingwith a contributionclaim.
Summary
ThisMemorandumconcernscontributionclaimsmadepursuanttotheNewJersey Spill CompensationandControlAct(SpillAct).1 TheSpillActmakesalldischargersofhazardous wastematerialthatcontributetoacontaminationjointly andseverallyliable.Theissuesplaced beforetheCommissionaroseinthecaseofMagicPetroleumv.ExxonMobilCorp.2 Thelaw authorizesprivate partiestoengage inactionsfor contributionwhenthe Departmentof Environmental Protection (DEP)holds onesuchpartyliable forcleanupcosts.3
Magicaddressesthequestionofwhetheraparty mustwaituntilaftertheDEPcompletes itsinvestigationandapprovesa remedial actionplanbefore filinga contributionaction.Magic alsoaddressthequestion ofwhetherthepartymustobtainwritten approval fromtheDEPpriorto filinga claim for contribution.
TheNewJersey SupremeCourt,inMagic,heldthatpartiesmayfileaclaimfor contributionpriortotheDEPmakingafinaldetermination,andindicatedthatacourtmayallocate liability withoutthefindingsoftheDEPbutmay notbeabletoaddressfinaldamages. Furthermore,theCourtexplainedthatparty neednotobtainwrittenapprovalfromtheDEP regarding a remediation plan priorto filingaclaim.4
1N.J.S.A.58:10-23.11to -23.24.
2MagicPetroleumv. ExxonMobilCorp.,218N.J.390(2014).
3N.J.S.A.
4Magic,218N.J.390.
Statute
Whenever one or more dischargersor personscleansupandremovesa discharge of a hazardoussubstance,those dischargersandpersonsshallhave arightof contributionagainstallotherdischargersand personsinanywayresponsiblefora dischargedhazardoussubstance or other personswhoare liableforthecostof the cleanupandremovalof thatdischarge of a hazardoussubstance.Inanactionfor contribution,thecontributionplaintiffsneedproveonly thatadischargeoccurred for whichthecontributiondefendantor defendantsare liablepursuanttothe provisionsof subsectionc.of section8of P.L.1976,c.141(C.58:10-23.11g)…In resolvingcontributionclaims,acourtmayallocatethecostsofcleanupandremoval among liablepartiesusing suchequitablefactorsasthecourtdeterminesare appropriate.
N.J.S. 58:10-23.11fsubsec. a(2)(a).
Background
Magic Petroleum beganoperation ofagasolinerefuelingstation in theearly1990s onLot
19.01intheClarksburgareofMillstoneTownship.5 WhenMagicbeganoperation,theywere awarethat several underground storagetanks wereleakingcontaminants into thesoiland water.6
ExxonMobilownedaseparateparcelwhereitsimilarly operatedagasrefuelingstationwith similarcontamination.7TheDEPhadpreviously beguninvestigationasearly as1989and determinedin1991thatthecontaminationwasaresultof“discharge.”8In1995theDEPissued adirectivetoremediatethesitetoMagic.9 DEPeventuallysoughtanAdministrativeConsent OrdertohaveMagicremediatethepropertywithDEPoversight.10Magicfailedtocomplyand requestedastay untilExxonMobilwasjoinedasadischargerforbeingaliablecontributing party.11FurtherproceedingsbetweentheDEP andMagicwereongoing,whileMagicenteredinto aprivateactionin2003againstExxonMobilandotherpartiesalleging partialresponsibility of each.12
ExxonMobilmoved to stayordismiss that action pendingtheDEP’s determination which Exxonallegedwasnecessarypriortoanyallocationofliability.13 TheCourtgrantedthestay, notingthatastheDEPwasalreadycollectingdetaileddata,theallocationwouldbeaccuratewhen theDEPconcludedtheiranalysis,andsuggestingthattheassessmentwouldsignificantlyaffect
5Magic,218N.J.at396.
6Id.
7Id.at 397.
8Id.
9Id.
10Id.
11Id.
12Id.at 398.
13Id.
any amountawarded.14TheAppellateDivisionaffirmed,indicating thatwhileconcurrent jurisdictionexisted,onlytheDEPcould“identifythecontamination,analyzetheextentofthe discharge,anddeviseacleanupstrategy.”15TheAppellateDivisionfoundthepotentialfindings oftheDEPwerenecessarypriortoanyallocationofliability,andreliedonthedoctrineofprimary jurisdictiontoleavethemattertotheexpertiseoftheDEPtoavoidinconsistentrulings.16 The Courtfurthercontendedthatany furtheractionwouldrequirewrittenapproval by theDEPfora remediation plan priortoanyclaim undertheSpill Act.17
Analysis
The Supreme Courtfirst addressedthelanguage andintentofthestatuteenactedin1976 toreducethe threatofhazardousmaterialstothe environmentand economy.18The relevant language prohibiteddischarge ofhazardoussubstancesandprovidedforitscleanupthroughthe DEP.19TheprimarypurposeoftheDEPisto actto cleanup contaminationresultingfromsuch a discharge,orarrangeandoverseethedischargerincleanupandremoval.20TheLegislaturesought expediency inremoval,andmadeany suchdischargerstrictly liable,withanycontributorstobe jointlyandseverallyliable.21Furthermore,theDEPmayinstituteanactiontorecoveranycosts expendedforremovalfromadischarger,andmaycollectthefullamountfromasingleparty though that partymaynot havebeen solelyresponsible.22
In1992,theLegislatureamendedtheActsothatpartiesheldliableby theDEPwouldbe abletoengageinprivateactionstoseekcontributionsfromotherresponsibleparties.23Any such actionwastobebasedontortlawcontribution to achieveasharing ofresponsibility,allocating thecontributionbasedonparty’spercentageliability.24Ultimately,theintentwastoensurethat privatepartiesdirectedbytheDEPtodoso,wouldengageinefficientandimmediateremediation ratherthanfailingtocooperateforfearofbeingheldsolelyreliableforsubstantialexpenditures.25
Thestandard ofproofonlyrequired adischargerto provethat anotherpartyhad discharged under
14Id.
15Id.
16Id.
17Id.
18Id.at 401.
19Id.
20Id.at 402.
21Id.
22Id.
23Id.at 403.
24Id.
25Id.
theSpillActtobeliable. 26 Allocationofliabilitywouldbebasedonequitablefactorsas determined bytheCourt,known as the “GoreFactors.”27
I. DoesConcurrentJurisdictionPrecludetheCourtfromRulingonAllocationof
Liability Priorto aFinal Determination by theDEP?
TheNew JerseySupremeCourt concluded that thestatute affords privateparties thesame rightastheDEPtosuepotentiallyresponsiblepartiesthatcauseddischarge.Undercircumstances inwhichtheDEPisallowedtojoinaparty attheonsetoftheclaimpriortoa remedial determination,aprivatepartyshouldbeaffordedthesamerightthroughacontributionclaim.28
Tofindotherwisewasdeemedfundamentally unfair,particularly where theentirecostcouldbe placeduponpartiesnotsubstantiallyliablefordamages.29Furthermore,thestatutegrantsonlythe Courtjurisdictionovertheclaim,nottheDEP,thustheonly optionavailableforthoseparties seekingtoavailthemselvesisaclaiminSuperiorCourt.30 Additionally,theDEPspecifically stated that in orderto establish percentageliability,theCourt was thepropervenueto do so.31
TheCourtconcludedthatliabilityallocationcanbedeterminedbythecourtbasedon expertproofswithouta finaldeterminationor inputfromtheDEP.The DEPhowever,maintains concurrentjurisdictionoverthecostsassociated.TheCourtultimatelydealswiththeallocationof theliability, not theactual costs of remediation.
The Courtnotedthatthelegislativeintentbehindthestatuteisexpediency andefficiency, andyet thecasein issueinvolvedyears oflitigation.
II. Is WrittenApproval by theDEPNecessary forContributionClaim?
The Appellate courtnotedthatthe language of thecurrentprivate rightof claim,includes the language “cleansupandremovesa discharge” and“personswhoare liable for the costof the cleanupandremovalofthatdischarge.”32Thedefinitionofcleanupandremovalcostsincludes withinitthatallcostsare subjecttotheapprovalof the DEP.The Appellate Divisiontherefore decidedthattheallocationofthecostsassessedby theCourtcannotbeperformedwithoutthe approval ofat least aremediation plan bytheDEP.
TheNewJerseySupremeCourtconcludednoapprovalwasnecessary.Allocationofcosts necessarilyimplies that costs havebeenorwill beincurred,and theCourtmust thereforeallocate those costs in an equitablemanner.Theremediation plan cited bytheAppellateCourt is onethat, when approved, would cite the method, means, and costs associated with cleaning the
26Id.at 411.
27Id.at 404.
28Id.at 408.
29Id.
30Id.
31Id.
32Id.at 410.
contamination,andanalysisof where the dischargeshadcomefrom.However,costsnotyet approvedwouldremainsubjecttothepercentageliability determined byafindingofthecourt. Establishingliabilityearlierwould bewell within theintent ofthestatute.
Conclusion
Asitiscurrently written,thestatuteisarguably lessclearthanthedeterminationofthe NewJersey SupremeCourtontheissuesidentifiedabove.CommissionStaffseeksauthorization to conductadditional researchandoutreachregarding theSpill Act inorderto determinewhether modification to thestatute could serveto clarifythelaw in this area.