New Jersey Department of Environmental Protection v. Dimant, A-2 September Term 2011; Supreme Court; opinion by LaVecchia, J.; decided September 26, 2012. On certification to the Appellate Division, 418 N.J. Super. 530 (2011) D.D.S. No. 17-1-7777 [45 pp.]

In this appeal, the Court considers the nature of the nexus that must be proven in an action by the New Jersey Department of Environmental Protection and the Administrator of the New Jersey Spill Compensation Fund (collectively the DEP) under the Spill Compensation and Control Act against Sue’s Clothes Hanger, the only direct defendant remaining in the case, for costs expended in the investigation and remediation of contaminated groundwater that tainted private wells in Bound Brook. Well samples revealed groundwater contaminated with perchloroethylene (PCE), a compound used in the dry cleaning industry.

The trial court dismissed the Spill Act claim, finding that the DEP failed to prove by a preponderance of the evidence that any discharge by Sue’s contributed to the groundwater contamination. Absent such a nexus, the court held that the DEP could not compel contribution by Sue’s under the Spill Act for investigation, cleanup, or damages caused by the contaminated groundwater.

The Appellate Division affirmed, rejecting as speculation the assertion that discharge from Sue’s from a pipe in 1988 could have caused the contamination found twelve years later.

The DEP petitioned the court, claiming that the trial and appellate courts misperceived the nexus required for liability under the Spill Act. The DEP argues that by imposing a common-law causation standard for damages, the Appellate Division panel’s decision has unsettled the law governing the liability of dischargers under the Spill Act for hazardous substance spills. The court granted the DEP’s petition for certification.

Held: To obtain damages under the Spill Act, the DEP must demonstrate, by a preponderance of the evidence, a reasonable connection between the discharge, the discharger, and the contamination at the damaged site. The proofs failed to establish a sufficient nexus between the groundwater contamination and Sue’s discharge during its operation.

Under the Spill Act, once a party is found responsible for a discharge, a nexus must be demonstrated to exist between the discharge and the contaminated site for which cleanup and other costs are incurred. Here, the parties dispute the nature of that nexus. The Appellate Division concurred with respondents that the DEP must demonstrate a causal nexus between a discharge and environmental damage. The DEP contends that it is sufficient to show a nexus between the substance discharged and “its appearance in the environment” to warrant relief under the Spill Act.

Pursuant to the Spill Act, Sue’s committed a “discharge” by operating a business where a pipe emitted fluid containing PCE onto the ground because its actions resulted in the leaking “of hazardous substances . . . onto the lands of the State.” There is no de minimis exception to the prohibition against discharging hazardous substances. Once a party is found responsible for a discharge, the issue is what proof is necessary to establish the required nexus between the discharge and the contaminated site for which cleanup and authorized costs are incurred.

Neither the Spill Act nor its legislative history squarely addresses the level of causation needed to impose liability on a discharger. While some causal link is required to obtain damages, the Court finds there is no basis to import a proximate-cause requirement because that would thwart the Act’s purpose. The causation standard must accommodate the Act’s various forms of relief, including injunctive relief or damages.

One can obtain injunctive relief under the Spill Act on proof of the existence of a discharge. However, in an action to obtain damages and costs, there must be shown a reasonable link between the discharge, the discharger, and the contamination at the specifically damaged site. A reasonable nexus or connection must be demonstrated by a preponderance of the evidence. It is not enough to prove that a defendant produced a hazardous substance and that the substance was found at the contaminated site.

Applying that standard here, the Court finds no reason to disturb the findings that the DEP’s proofs were inadequate to obtain the relief sought from Sue’s. The proofs failed to connect the discharge from the pipe during Sue’s operation to the soil or groundwater damage. Nor can the DEP credibly claim, more than a decade after first observing the dripping pipe on Sue’s premises, that Sue’s must bear the expense of studying the various ways in which that drip might have contributed to the groundwater pollution and what must now be done to remediate the groundwater pollution. The DEP’s claims for relief — for loss of natural resources and to have Sue’s reimburse the state for the cost of remedying the harm that resulted from the groundwater contamination — were appropriately rejected.

The judgment of the Appellate Division is affirmed as modified to clarify that the Spill Act does not require proof of proximate-cause causation of specific environmental damage.

Chief Justice Rabner, Justices Albin, Hoens and Patterson; and Judge Wefing (temporarily assigned) join in Justice LaVecchia’s opinion.

For appellants — Richard F. Engel, Deputy Attorney General, (Jeffrey S. Chiesa, Attorney General of New Jersey, attorney; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Mark D. Oshinskie, Deputy Attorney General, on the briefs). For respondent Sue’s Clothes Hanger Inc. — George R. Hardin (Hardin, Kundla, McKeon & Poletto, attorneys; Mr. Hardin, Arthur A. Povelones, Jr., and James P. Krupka, on the briefs). For respondents Bharat K. Shah, Priti B. Shah, and PTR, PTB, PTM Corp. — Jacob S. Grouser (Hoagland, Longo, Moran, Dunst & Doukas, attorneys). For amici curiae New Jersey Chamber of Commerce and Commerce and Industry Association of New Jersey — Keith E. Lynott (McCarter & English, attorneys; Mr. Lynott and J. Forrest Jones, on the brief). Steven J. Picco submitted a brief on behalf of amici curiae Fuel Merchants Association of New Jersey and Chemistry Council of New Jersey (Saul Ewing, attorneys; Mr. Picco, Andrea A. Lipuma and Deborah L. Shuff, on the brief). William J. Schulte submitted a brief on behalf of amici curiae Food and Water Watch, Inc., and Raritan Riverkeeper, Inc. d/b/a New York/New Jersey Baykeeper (Eastern Environmental Law Center, attorneys; Mr. Schulte and Alice R. Baker, on the brief).