NJ Supreme Court Clarifies Nexus Standard Under Spill Act

In NJDEP v. Dimant, et al., the Department filed suit under New Jersey’s Spill Compensation and Control Act (the “Spill Act”), alleging that the defendant, Sue’s Clothes Hanger, Inc. (“Sue’s”), a dry cleaning business, was responsible for damages related to groundwater contamination on various properties in Bound Brook. The sole evidence supporting DEP’s claim for damages against Sue’s rested on a pipe that was found dripping perchloroethylene (PCE) onto a driveway in the late 1980s. The trial court judge ruled that the DEP had not sufficiently proved a nexus between the PCE dripping from Sue’s pipe in the 1980s and the groundwater contamination at issue. The plaintiffs appealed.

The Appellate Division affirmed and the New Jersey Supreme Court (which released its decision on September 26th), affirmed and modified the Appellate Division’s ruling, and determined that “a party in Sue’s circumstances must be shown to have committed a discharge that was connected to the specifically charged environmental damage … in some real, not hypothetical way.” The DEP argued that because PCE had been found dripping onto the ground from a pipe, Sue’s should have been held strictly liable under the Spill Act for all costs and damages associated with all PCE contamination in the area. In support of this argument, DEP relied on the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which plaintiffs claimed requires no proof of causation between a defendant’s release of a hazardous substance and a plaintiff’s incurrence of response costs. Specifically, the DEP argued that a “proven discharge at the site of contamination is sufficient to meet the nexus test.” The Court rejected this argument, noting that the distinct language in the Spill Act made it inappropriate to adopt the more lenient causation standard applied in CERCLA claims. However, the Court rejected a more stringent “proximate cause” standard and fashioned a middle ground to establish proof of nexus under the Spill Act. In sum, the Court held that “on proof of the existence of a discharge, one can obtain prompt injunctive relief under the Spill Act. However, in an action to obtain damages, authorized costs and other similar relief under the Act there must be shown a reasonable link between the discharge, the putative discharger, and the contamination at the specifically damaged site.”

The ultimate impact of this decision for future Spill Act cases remains to be seen. Until now, New Jersey courts have largely looked to CERCLA for guidance on proof of nexus in Spill Act cases. The State’s highest court has now clarified the standard for nexus in a Spill Act suit and has created two different standards: one for injunctive relief and one to recover damages. To recover damages, a plaintiff cannot simply present a hypothetical nexus and ask the trier of fact to connect the dots, nor can they obtain damages from a defendant without connecting that defendant’s specific discharge to the contamination at a specific site.