NJ App. Div. dismisses Spill Act contribution claim due to primary jurisdiction of NJDEP.

In Magic Petroleum, Inc. v. Exxon Mobil, the New Jersey Appellate Division dismissed, without prejudice, Magic’s claim for contribution of remedial costs against Exxon due to NJDEP’s primary jurisdiction of the remedial investigation at the plaintiff’s property. Plaintiff had been the subject of an administrative consent order (ACO) to investigate and remediate contamination at its property resulting from leaking underground storage tanks. Plaintiff contended that the majority of the contamination came from the neighboring Exxon station and refused to comply with its obligations under the ACO until the NJDEP required Exxon to participate in the investigation. Magic litigated its obligations under the ACO through administrative proceedings, and was required to follow the order. Magic, however, continued to refuse to conduct the investigation, insisting that the investigation should be imposed upon and shared by Exxon. The NJDEP eventually took over the investigation of the plaintiff’s property. Magic then commenced a contribution action against Exxon. Exxon filed a motion to stay or dismiss the proceedings, without prejudice, pending the NJDEP’s investigation and remediation of the Magic property, arguing that the NJDEP’s efforts must precede any decision by the court. The trial judge dismissed the case, deferring to the NJDEP’s primary jurisdiction. The Appellate Division affirmed. The Appellate Court noted that under the doctrine of “primary jurisdiction” a court may defer to an agency where the resolution of an issue is within the special competence of the agency. The court further noted that private contribution rights under the Spill Act require the court to allocate responsibility for remediation costs, but that the initial determination of whether a party is responsible can be decided by the NJDEP, and that “only the DEP can define the contaminants, determine the extent of the discharge, identify the authorized forms of investigative testing, and permissive methodology of cleanup.” Furthermore, “to be entitled to reimbursement and contribution under the Spill Act, a party must obtain written approval under from the DEP of the investigation and proposed remedial action.” Accordingly, the court concluded that these decisions were within the scope of the special expertise of the DEP and should be determined prior to the case being able to proceed. This decision demonstrates that a responsible party under the Spill Act that does not conduct investigation and remediation, but allows it to be done by the State, does so at its peril. To do so may have a significant impact in the party’s ability to pursue a contribution claim against other responsible parties, as it allows the NJDEP to determine and define the scope of the investigation, remediation, and possibly to potentially influence any future contribution claim or allocation. It is interesting to consider the effect of the Site Remediation Reform Act (SRRA) on the statements by the court that the DEP will define the contaminants, the extent of the discharge, the forms of investigation and the method of cleanup. Under the SRRA these determinations can be made by a Licensed Site Remediation Professional (LSRP), in accordance with the regulations for site investigation and remediation, referred to the Tech. Regs. Accordingly, it is may not be that the DEP has to make these decisions. This points, again, to the importance of the party seeking contribution to address and control the response to be able to develop the information, and assert and control the contribution claim. DiFrancesco, Bateman, Coley, Yospin, Kunzman, Davis, Lehrer & Flaum, PC is a full service law firm in New Jersey which provides a broad range of legal services, including the representation of clients in environmental and defense of toxic exposure matters. For additional information about the matters in this bulletin or in the firm’s environmental practice, please contactSteven A. Kunzman, Esq. who heads our Environmental and Latent Injury Litigation Department.    

DiFrancesco, Bateman, Kunzman, Davis, Lehrer & Flaum PC (http://www.dbnjlawblog.com) is a full service law firm in New Jersey which provides a broad range of legal services. For additional information about the matters in this bulletin or in the firm’s Employment Practice, please contact Richard P. Flaum, Esq.

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