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Superior Air Products Co. v. NL Industries Inc.

Decided: March 17, 1987.

SUPERIOR AIR PRODUCTS CO., PLAINTIFF-RESPONDENT,
v.
NL INDUSTRIES, INC., STATE OF NEW JERSEY, DEPARTMENT OF ENVIRONMENTAL PROTECTION, DEFENDANTS-APPELLANTS. (TWO CASES)



On appeal from the Superior Court, Chancery Division, Middlesex County.

Furman, Shebell and Stern. The opinion of the court was delivered by Stern, J.A.D.

Stern

[216 NJSuper Page 48] Defendant, NL Industries, Inc. (NL), sold land contaminated with toluene and other hazardous waste to plaintiff, Superior Air Products Co. (Superior). Plaintiff learned of the contamination

upon its later attempt to resell the property.*fn1 Under the provisions of the Environmental Cleanup Responsibility Act (ECRA), N.J.S.A. 13:1K-6 et seq., plaintiff was required to rectify the contamination prior to transfer of title. That act requires a declaration by the New Jersey Department of Environmental Protection (DEP) that there has been no discharge of hazardous substances or waste, or cleanup of such material as directed by DEP, as a precondition of closure, sale or transfer of certain industrial property.

Plaintiff filed suit against NL under the Environmental Rights Act (ERA), N.J.S.A. 2A:35A-1 et seq., for enforcement of the Spill Compensation and Control Act (Spill Act), N.J.S.A. 58:10-23.11 et seq., and for other relief directed to requiring NL to be responsible for the cleanup, and against DEP to compel an enforcement action against NL pursuant to the Spill Act. A counterclaim by DEP sought an order requiring plaintiff to comply with the provisions of ECRA. The trial court denied NL's motion to dismiss but granted a similar motion of DEP related to the specific relief sought against it. However, over objection of DEP, the court ordered a remand to DEP for investigative proceedings under § 8 of ERA, to determine the party responsible for the cleanup. All trial court proceedings were stayed pending the remand.

Pursuant to leave granted DEP appeals from the remand and NL appeals from the denial of its motion to dismiss. We consolidated the appeals for argument and decision. On the appeal we address only the issues raised on the motions for leave to appeal. We are required to decide the relationship between ERA, N.J.S.A. 2A:35A-1 et seq., the Spill Act, N.J.S.A. 58:10-23.11 et seq., and ECRA, N.J.S.A. 13:1K-6 et seq. We hold that an ECRA proceeding before DEP should not be

delayed by the filing or processing of a private suit under ERA or the Spill Act.

I

In its complaint plaintiff alleges that NL is liable for toluene contamination on the property it purchased from NL and therefore is responsible for remediation or cleanup of the contamination.*fn2 The complaint further asserts causes of action against NL seeking enforcement of the Spill Act and the federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C.A. § 9601 et seq., pursuant to § 4(a) of ERA, N.J.S.A. 2A:35A-4(a). Plaintiff also seeks declaratory and equitable relief against NL for the protection of the environment pursuant to § 4(b) of ERA, N.J.S.A. 2A:35A-4(b). Finally, plaintiff seeks damages from NL, a mandatory injunction requiring NL to clean up the property and indemnification from any claims and suits by DEP against plaintiff under ECRA or for costs of cleanup resulting therefrom.

As to DEP, plaintiff seeks a mandatory injunction to compel DEP and its Commissioner to enforce the Spill Act. DEP is also joined as a necessary party by virtue of its ownership of potentially contaminated property adjoining the former NL land and because of the need to secure DEP approval of any remediation to be undertaken. Heraeus-Amersil, another neighboring property owner, is also joined as a necessary party. In its counterclaim DEP seeks enforcement of ECRA against plaintiff.

While granting the motion of DEP and the Commissioner to dismiss because DEP's duty to take action under § 11f(a) of the Spill Act is discretionary, the court ordered DEP to remain a nominal defendant by virtue of its counterclaim and as a necessary party. However, the trial court also remanded plaintiff's ERA claims to DEP to conduct investigatory proceedings. The judge concluded that the remand was required by § 8 of ERA as DEP was the authority responsible under the Spill Act for determining the party liable for the contamination. The court stayed all further proceedings pending the outcome of the administrative investigation and retained jurisdiction.

The court subsequently clarified its original order by making clear that DEP was to conduct a Spill Act investigation to decide the party or parties responsible for the contamination of plaintiff's property contemporaneously with the agency's review of plaintiff's ECRA application.

II

The subject of this controversy is a 10.2 acre section of a 95 acre parcel of land located in Sayreville. Prior to June 1971 NL had owned and used the land for operation of its facility known as the Nalcon Project, which involved the manufacture and storage of toluene. The activity of the project included the presence of toluene storage tanks of 65,000 gallon capacity, a toluene mixing facility of 7,000 gallon capacity, and settling basins both on and off the property. In June 1971 NL sold the 10.2 acre section to plaintiff.

Plaintiff operated its business of fabricating air separation equipment on the property until 1984. Although this business allegedly did not involve the use of toluene the record suggests that plaintiff handled some hazardous waste at the site.

On October 12, 1984 plaintiff entered into a lease and option to buy agreement for the property with Zagata Fabricators Inc. However, compliance with ECRA was required to conclude the sale. Thus, on October 19, 1984 plaintiff filed an ECRA application

and later a comprehensive sampling plan with the DEP's Bureau of Industrial Site Evaluation (BISE).

Plaintiff retained the environmental consulting firm of Betz, Converse, Murdoch Eastern, Inc. (BCM) to conduct various soil testing and well monitoring activities at the property. BCM's tests indicated the existence in the soil and ground water of petroleum hydrocarbons as well as toluene, with potential contamination extending to the surrounding properties. Toluene is defined as a hazardous substance. N.J.A.C. 7:1E-Appendix A.

Plaintiff informed NL of the contamination and expressed its expectation of NL's "full cooperation . . . in its remediation." BCM's test results were forwarded to BISE on January 18, 1985 and to the Division of Water Resources of DEP on February 4, 1985. BCM characterized the presence of toluene contamination as its "most significant finding. . . ."

Over the next three months plaintiff supplied NL with various data including the BCM test analysis. By letter dated February 6, 1985 plaintiff wrote to NL:

We are approaching the point that all environmental concerns of the property other than the toluene in the ground water are resolved. Hence, it is that contamination which is the proximate cause of our inability to transfer title on this property.

NL described as "vague and deficient" that part of the BCM report describing plaintiff's handling of hazardous substances and wastes at the site, and requested answers to eleven specific queries. By letter dated February 19, 1985, NL also took exception to plaintiff's description of the toluene as

the "proximate cause" of [plaintiff's] inability to transfer title on the property. Along these lines, the January 18, 1985 letter from BCM to the DEP is misleading insofar as it characterizes the presence of toluene as the "most significant finding" of its sampling at the site.

NL noted the presence of other substances at levels higher than that of toluene, considered BCM's data biased and listed other likely sources of toluene.

After review and evaluation, on February 21, 1985 BISE advised plaintiff of its finding that "[t]he presence of toluene in

the western edge of the property . . . is widespread. . . ." However, it reported that

[b]ecause that data is inadequate . . . it is not possible to state that toluene and petroleum hydrocarbons are the only two significant contaminants on-site. A revised sampling plan is needed which addresses ...


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