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Marsh v. New Jersey Dept. of Environmental Protection

December 18, 1997


On certification to the Superior Court, Appellate Division, whose opinion is reported at 286 N.J. Super. 620 (1996).

The opinion of the Court was delivered by O'hern, J. Chief Justice Poritz and Justices Handler, Pollock, Stein, and Coleman join in Justice O'HERN's opinion. Justice Garibaldi did not participate.

The opinion of the court was delivered by: O'hern

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

Marsh v. New Jersey Department of Environmental Protection (A-7/8-97)

Argued September 8, 1997 -- Decided December 18, 1997

O'HERN, J., writing for a unanimous Court.

This appeal concerns the right of one who has acquired property, without knowledge of the presence on the property of hazardous substances, to seek reimbursement of the costs of remediation under the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 through 23.24. The Spill Act created the New Jersey Spill Compensation Fund, which provides reimbursement for the costs of environmental cleanup for qualified claimants.

In 1991, Marie Marsh's mother conveyed to her property located on the Black Horse Pike in Washington Township. From 1930 to 1974, three prior owners of the property, including Marsh's parents, leased the property to operators of gas stations. Marsh, however, had never used the property as a gas station. When Marsh attempted to subdivide the property, Township representatives informed her that there might be underground petroleum storage tanks which would have to be removed or properly closed.

Marsh retained an engineering firm to examine the property. The firm advised that it believed there were two underground storage tanks on the property. Marsh authorized the firm to excavate the tanks. During the course of excavation, it was discovered that the tanks had not been properly sealed. In addition, three other tanks were discovered. These three tanks were perforated and had discharged petroleum products into the soil in the past, and at least one of the tanks was still leaking petroleum. Marsh spent more than $41,000 to have the tanks and contaminated soil removed. In addition, Marsh was told she would have to install monitoring wells and sample groundwater, at a cost in excess of $10,000.

In April 1992, Marsh filed a claim with the Spill Fund seeking compensation for cleanup costs incurred. The administrator of the Spill Fund denied the claim and referred the matter to the OAL. The Fund argued that, pursuant to N.J.S.A. 58:23.11g(c)(1), Marsh was in the disqualified category of a person "in any way responsible for the discharge," either because she owned the property while a discharge of petroleum occurred or because she had not exercised due diligence before acquiring the property.

Marsh argued that at the time of her acquisition there was no responsibility on the part of a person taking title to property to conduct an inquiry into the presence of hazardous substances and that such a requirement had only been inserted into the Spill Act by amendment in 1993 as part of the Industrial Site Recovery Act (ISRA). This provision imposed responsibility to investigate for hazardous substances on a person acquiring property as a condition of being absolved from responsibility under the Spill Act. Marsh also argued that a DEP regulation including a similar due diligence requirement was not effective until after the enactment of ISRA in 1993.

The ALJ denied Marsh's claim. She held that Marsh was responsible because a portion of the discharge took place during the time she owned the property. The ALJ further held that the innocent landowner defense was unavailable to Marsh, since she accepted the property knowing her parents had leased it for use as a gasoline service station.

On appeal, the Appellate Division affirmed the denial of the claim, but disagreed with the reasoning of the ALJ. Relying on this Court's decision in Department of Environmental Protection v. Ventron Corp., 94 N.J. 473 (1983), it concluded that the fact that a de minimis quantity of hazardous substance continued to make its way into polluted property did not make the owner during that period a "responsible party" within the meaning of the Act. In addition, it concluded that the DEP could not rely on the requirement of due diligence created by ISRA in 1993, because the property was transferred prior to that date. Finally, the panel concluded that the DEP regulation requiring a diligent inquiry before obtaining title in order to recover from the Spill Fund was not authorized by law until ISRA was enacted.

The Appellate Division, however, found that Marsh's mother was clearly a responsible party because she should have known of and fixed the leaking tanks long before she gave the land to Marsh. The panel determined that the Act did not permit a property owner responsible for contamination to obtain reimbursement for cleanup by making a gift of the property to a family member. It held that a donee's right to recover reimbursement from the Spill Fund is no greater than the entitlement of the donor.

The Court granted Marsh's petition for certification and the DEP's cross-petition concerning the validity of its regulation and the exception from responsibility for de minimis discharges.

HELD : A landowner is not eligible to recover under the Spill Fund if pollutants were discharged during the period of ownership. On this record, the DEP's regulation making ineligible for Spill Fund compensation an owner who did not exercise due diligence before purchasing the property is valid. Finally, there is no authority for a minimal discharge exception from the provisions of the Spill Act.

1. New Jersey's Spill Act was a pioneering effort by government to provide monies for a swift and sure response to environmental contamination. In 1976, the Legislature broadened the scope of the Spill Act and streamlined its administration. It shifted control of the Spill Fund from the Department of the Treasury to the DEP. Although DEP continues its managerial role in cleaning up the environment, it has a second role as keeper of the public purse. (Pp. 8-9)

2. Marsh may not collect cleanup costs from the Spill Fund if she would be liable for those costs under the Spill Act. When Marsh filed her claim in 1992, the relevant statute made her liable for cleanup costs if she was "in any way responsible" for the pollution that occurred. This Court interpreted that language in Ventron, concluding that one who owned or controlled the property at the time of the pollution was a responsible party. ...

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