New Jersey Supreme Court Finds Neither Plan Approval Nor Complete Remediation are Prerequisites to a Spill Act Contribution Action

In Magic Petroleum Corporation v. Exxon Mobil Corporation, the New Jersey Supreme Court held that a party funding remediation of a contaminated site may bring a contribution claim against other potentially responsible parties (“PRPs”) before completing remediation and prior to receiving the New Jersey Department of Environmental Protection’s (“DEP’s”) written approval of the remediation plan. In so doing, the Court has provided certainty, to a degree, to the environmental remediation process in New Jersey.

In Magic Petroleum, the DEP required Magic Petroleum Corporation (“Magic”) to remediate a contaminated site pursuant to the Spill Compensation and Control Act, (“Spill Act”) N.J.S.A. 58:10-23.11 to -23.24. While that remediation was ongoing, Magic sued PRP Exxon Mobil for contribution. The trial court dismissed Magic’s contribution claim after ruling that such a claim could only be filed following complete remediation of the site. The Appellate Division agreed, finding that because the DEP — and not the trial court — has jurisdiction to identify contamination, analyze the extent of discharge, and devise a cleanup strategy, and those findings are a prerequisite to a court’s allocation of liability among multiple responsible parties, dismissal of Magic’s contribution claim was proper.

The New Jersey Supreme Court reversed after noting that it would be contrary to the stated goals of the Spill Act — namely, prompt remediation — to force a discharger to bear the full remediation costs until such time as the cleanup of the site is completed, knowing full well that the environmental remediation process often takes many years and can involve substantial expenses. The Court additionally ruled that a contribution plaintiff need not obtain the DEP’s written approval of the investigation and remediation plan prior to filing its contribution claim, notwithstanding that a court cannot issue a final damages award without DEP written approval of actual expenses incurred.

In one sense, Magic Petroleum leaves little room for equivocation: contribution claims may proceed at the onset of remediation. Nonetheless, while the Court’s decision is instructional, its recognition of the fact that in practice, the DEP has largely delegated supervision of the site remediation process to Licensed Site Remediation Professionals (“LSRP’s) — including the approval of remediation costs — is limited. Thus, to the extent the Magic Petroleum decision speaks to written approval from the DEP specifically, it leaves an open question of whether courts will treat approval of expenses by an LSRP as the equivalent of DEP approval for purposes of issuing a final damages award.

Magic Petroleum is the first case to be decided in what will prove to be an active year for the Court regarding environmental issues. New Jersey’s environmental community now awaits the Court’s ruling on the propriety of the Appellate Division’s determination in Morristown Associates v. Grant Oil Co. that the six year statute of limitations applicable to property damages claims is applicable to private Spill Act claims. At a minimum, both rulings will require that contribution defendants rethink their approach, strategy, and level of involvement in the remediation process.

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