[138 NJSuper Page 277] This declaratory judgment action was instituted by Lansco, Inc. (Lansco) against, among others, its insurance carriers Royal Globe Insurance Companies and
Newark Insurance Company (collectively referred to as Royal) to establish coverage under a comprehensive general liability insurance policy issued by Royal for costs incurred by Lansco in cleaning up an oil spill.*fn1
The essential facts are not disputed. Lansco leases premises bordering the Hackensack River at 275 W. Fort Lee Road, Bogota, New Jersey, where it maintains tanks for the storage of asphaltic oil. Sometime during the night of December 29, 1974 a person or persons unknown opened the valves on two storage tanks, causing some 14,000 gallons of oil to leak from the tanks and onto Lansco's property. Vandalism was suspected and the police were contacted, but to this date investigation of the incident has failed to determine how it was caused. The only testimony in regard to the specifics of the occurrence was that a key required to open the valves, which was usually kept in a locked building overnight, was found on the ground near the tanks on the morning of December 30.
The oil leaked from the tanks onto the ground and made its way into two storm drains located on Lansco's property and which in turn empty into the Hackensack River. The incoming high tide carried the oil approximately five miles upstream to the vicinity of the Oradell Reservoir. The Department of Environmental Protection (DEP) was notified of the spill by both Lansco and a sanitary inspector of the Township of Teaneck who, after observing the oil in the river, followed it downstream until he located its source during the afternoon of December 30.
In response to the calls to DEP Edward J. Faille, Sr., an employee of DEP, arrived at Lansco's premises to investigate the occurrence on December 30. He provided Lansco with printed copies of N.J.S.A. 58:10-23.1 et seq. and N.J.S.A. 23:5-28, and he informed it that under these statutes Lansco was obligated to clean up the oil spill. Lansco was also told that if it did not itself undertake to clean up the spill, the State would arrange to do so and bill Lansco for the costs and levy fines.*fn2
The pertinent parts of the statutes, copies of which were given to Lansco, are as follows:
The discharge of hazardous substances, debris and petroleum products into, or in a manner which allows flow or runoff into or upon the waters of this State and the banks or shores of said waters is prohibited. [ N.J.S.A. 58:10-23.4]
Any person responsible for discharging petroleum products, debris or hazardous substances in the manner prohibited by section 4 shall immediately undertake to remove such discharge to the department's satisfaction. If the person responsible fails immediately to undertake to remove the discharge to the department's satisfaction, the department may undertake the removal of such discharge and may retain agents and contractors for such purpose who shall operate under the direction of the department. The department may authorize a third person, affected by such an unlawful discharge, to expend funds to remove said discharge at the expense of the person responsible for same. [ N.J.S.A. 58:10-23.5]
Any person who has discharged any petroleum products, debris, or hazardous substances into the waters of this State and is therefore responsible for removing same from said waters and shall be liable for moneys expended for the removal of said discharges by (a) himself, (b) the department, and (c) third persons so authorized by the department, but not to an extent greater than $14,000,000.00, except that where the department can show such discharge was the result of willful negligence or willful misconduct within the privity and knowledge of the person responsible, such person shall be liable for the full amount of the costs. Nothing herein shall be deemed to exclude or impair any other liability imposed by law. [ N.J.S.A. 58:10-23.7]
No person shall put or place into, turn into, drain into, or place where it can run, flow, wash or be emptied into, or where it can find its way into any of the fresh or tidal waters within the jurisdiction of this State any petroleum products, debris, hazardous, deleterious, destructive or poisonous substances of any kind; . . . A person violating this section shall be liable to a penalty of not more than $6,000 for each offense . . . If the violation is of a continuing nature, each day during which it continues shall constitute an additional, separate and distinct offense. The department is hereby authorized and empowered to compromise and settle any claim for a penalty arising under this section in such amount in the discretion of the department as may appear appropriate and equitable under all of the circumstances. [ N.J.S.A. 23:5-28].
After ascertaining that Lansco did not itself have the capability to contain and clean up the spill, Faille provided Lansco with a list of contractors who could do so. Lansco selected Duane Marine Corporation, and by that same afternoon Duane Marine ...