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New Jersey Department of Environmental Protection v. Alden Leeds Inc.

March 12, 1998

NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, PLAINTIFF-APPELLANT,
v.
ALDEN LEEDS, INC., DEFENDANT-RESPONDENT.



A-50 September Term 1997

Argued November 18, 1997

On certification to the Superior Court, Appellate Division.

The opinion of the court was delivered by: Coleman, J.

Decided

This appeal raises two significant issues. The first is whether the Air Pollution Control Act of 1954 (APCA), N.J.S.A. 26:2C-1 to -25.2, and N.J.A.C. 7:27-5.2(a), one of its implementing regulations, impose strict liability for civil penalties on the owner or operator of a chemical facility that releases toxins into the atmosphere because of a fire of unknown origin on its premises. The second issue raised is whether the Department of Environmental Protection (DEP) was timely notified of the release as required by N.J.S.A. 26:2C-19e.

The Commissioner of the DEP concluded that the regulation imposes strict liability. He concluded that although a nexus between Alden Leeds and the release of pollution into the atmosphere is required, the nexus can be established on the sole basis of knowing storage of highly reactive chemicals on the premises. The Commissioner of the DEP also found that the notice it received from the chemical operator was not timely. The Appellate Division found that merely storing chemicals on the premises does not satisfy the nexus requirement. The court found that the notice to the DEP was timely.

We hold that the APCA imposes strict liability and that knowingly storing chemicals that are highly reactive to heat and water satisfy the causal nexus. We also hold that the notice of the fire that was given to the DEP satisfied the APCA's requirements.

I.

Alden Leeds stores, ships, and repackages swimming pool chemicals. Mark Epstein (Mark) is the president of Alden Leeds and his brother, Steven Epstein (Steven), is the vice president. The company has its principal place of business in Kearny. It processes dry chlorine into tablet form at a different site in South Kearny. The company packages those tablets for sale and distributes them in plastic containers labeled with silk screening equipment at the Kearny location. On any given day, twenty-one different chemicals that present a variety of hazards, were stored at the Kearny facility. Alden Leeds listed both the chemicals stored and the individual hazards attendant to each in a Right-to Know statement filed with the DEP.

On Saturday, April 10, 1993, a fire of unknown origin occurred at the Kearny facility while it was closed for the Easter holiday. There were no security guards or other personnel at the Kearny site that day. Jesus Urriola, an operations manager at Spectra-Serv located 300 feet north of the Alden Leeds Kearny site, saw smoke coming from Alden Leeds's property at approximately 11:30 a.m. He tried to call the fire and police departments for ten or fifteen minutes; the Kearny Fire Department arrived on the scene four or five minutes after the call. The burglar alarm system at Alden Leeds began sounding at 12:02 p.m., but there was no response to that alarm. The Kearny Fire Department notified the DEP of the fire at 12:27 or 12:28 p.m. and reported that the fire had burned through the roof in a building containing "hazardous chemicals," causing the release of an "unknown gas."

At approximately 12:30 p.m., while Steven Epstein was driving to the Kearny facility, he saw smoke coming from the direction of Alden Leeds. A toll record shows that he exited the New Jersey Turnpike at exit 15E (a Kearny exit) at 12:37 p.m. When Steven arrived on the scene at approximately 12:39 p.m., he noticed that the gate to the property was open and there were firefighters present. He could not immediately tell whether the fire was at the Alden Leeds site or on neighboring property.

Steven eventually discovered that an Alden Leeds building, designated "Building One," was on fire. That structure housed offices, the art department, inventory, the liquid filling and silk screening operations, and employee locker rooms. Steven located and questioned the fire chief. Steven attempted to gain access to the building to determine exactly what was on fire so that he could advise the firefighters and call the DEP, but the fire chief refused and informed him that the DEP had already been called.

Approximately ten minutes later, the fire chief permitted Steven to enter the building. Steven informed the chief that the ceiling under which the firefighters were working was wooden and that the second floor housed heavy machinery. Steven then called the DEP to report the fire; he responded to all questions asked of him by the person answering the telephone. Alden Leeds's phone records show that Steven called the DEP at 12:57 p.m. and the DEP records indicate that the call was received at 12:58. It is unclear from the record whether the DEP operator asked Steven about the presence of hazardous chemicals. Steven recalls that the operator asked what was on fire and that he indicated polyethylene bottles and silk screening equipment. DEP records show that a fire was reported and that machinery and polyethylene bottles were threatened. The tape recording of this conversation was inaudible. Steven testified that it was not until at least one-half hour after his call to the DEP that the fire reached the chlorine stored in the building.

DEP Emergency Response Specialist Bruce Doyle arrived on the scene shortly after 1:30 that afternoon. According to his analysis of the smoke from the fire, chlorine contaminants were being released into the atmosphere at a level of .5 parts per million. The DEP investigation of the fire revealed atmospheric chlorine levels between .1 and .3 parts per million in the western end of Hudson County. Doyle testified that different agencies establish an unacceptable level of chlorine in the atmosphere at between .5 and 1 part per million.

At the time the fire apparently started, Mark Epstein was shopping with his family in Nanuet, New York. At approximately 12:30 p.m., Mark's wife called her home from her car phone and was informed of the fire. Phone records show that at 12:44 Mark called the Kearny police from his wife's car phone. The police informed him that the DEP had been called and that Steven was on the scene.

The fire caused $9 million in damages to the Alden Leeds property and the release of chlorine gas and other by-products into the atmosphere. The DEP informed people downwind of the fire that they should remain indoors with their windows closed. The fire also necessitated the closing of the Turnpike, Route 1/9, the Lincoln Highway, the Pulaski Skyway, and Route 280. The DEP halted service on the PATH and Amtrak trains in that area. A number of people went to local hospitals complaining of respiratory problems.

II.

The DEP assessed two civil administrative penalties against Alden Leeds that are relevant to this appeal. First, the DEP found that Alden Leeds "did cause, suffer, allow or permit chlorine and calcium chloride resulting from a fire to be emitted into the outdoor atmosphere in quantities which resulted in air pollution, in violation of N.J.A.C. 7:27-5.2(a)." Second, the DEP found that Alden Leeds "caused the release of an air contaminant(s) chlorine and calcium chloride resulting from a fire, in a quantity or concentration which posed a potential threat to public health, welfare or the environment or may have reasonably resulted in citizen complaints and failed to notify the Department immediately, in violation of N.J.S.A. 26:2C-19(e)."

The DEP assessed penalties for each offense in the amount of $6,500. It calculated the amounts by starting with $10,000, the base penalty for the offenses, and then applied percentage reductions for remedial measures taken (15%), population affected (5%), and off-site property damage (15%). Alden Leeds contested the penalties assessed, and the matter was referred to the Office of Administrative Law.

An Administrative Law Judge (ALJ) found that Alden Leeds was responsible for the release under the provisions of the APCA, determining that although an unknown third party caused the fire, the APCA is a strict liability statute. The ALJ also concluded that Alden Leeds failed to notify the DEP immediately because a call was not made to the DEP until one hour and eighteen minutes after the initial release and the call did not provide relevant information such as a list of potentially toxic chemicals threatened by the fire. Furthermore, the ALJ found that Alden Leeds was obligated to have reliable safety mechanisms in place that were commensurate with the hazardous inventories stored on the premises.

The Commissioner of the DEP adopted the ALJ's decision with regard to the release. The Commissioner concluded that although neither an intent to cause a release nor fault is a necessary requirement to impose liability under the APCA, "some causal nexus between Alden Leeds and the offending release must be established." The Commissioner found that the required causal nexus was established by the knowing storage of chemicals reactive to heat and water. The Commissioner also concluded that the reasonableness of Alden Leeds's notice to the DEP must be determined based on the time it took Alden Leeds to notify the DEP after it had actual knowledge of the fire. The Commissioner determined that the delay in this case was unreasonable.

The Appellate Division reversed the Commissioner's decision in an [Editor's note: originally released as an unpublished opinion]. Finding that the APCA imposed strict liability, the appellate panel concluded that the storage of chemicals was not a sufficient causal nexus. The panel also concluded that because Alden Leeds did not cause the release, immediate notification was not required. The court noted that even if a causal nexus was found, it was reasonable for Steven to gather information prior to calling the DEP. We granted the DEP's petition for certification, 149 N.J. 143 (1997), and now affirm in part and reverse in part.

III

A.

As originally enacted, section 8 of the APCA authorized the Air Pollution Control Commission (Commission), established within the Department of Health (DOH), to "formulate and promulgate . . . regulations controlling and prohibiting air pollution." L. 1954, c. 212, § 8. In 1967, the Commission was abolished and all its powers, including the power to promulgate regulations, were transferred to the DOH. L. 1967, c. 106, §§ 2, 6. In 1970, the Legislature transferred all functions, powers, and duties of the DOH relating to air pollution to the Division of Environmental Quality and the Commissioner of the DEP. N.J.S.A. 13:1D-7. Therefore, the fire in the present case falls within the jurisdiction of the DEP.

In 1960, the DOH and the Air Pollution Control Commission promulgated the New Jersey Air Pollution Control Code. The regulation provided: "No person shall cause, suffer, allow or permit to be emitted into the outdoor atmosphere substances in quantities which shall result in air pollution." New Jersey Air Pollution Control Code, Chapter VI, Section 2.1. That regulation was subsequently readopted and codified at N.J.A.C. 7:27-5.2(a). It provides:

Notwithstanding compliance with other subchapters of this chapter, no person shall cause, suffer, allow or permit to be emitted into the outdoor atmosphere substances in quantities which shall result in air pollution as defined herein.

[N.J.A.C. 7:27-5.2(a).]

Alden Leeds was charged with violating that regulation.

Related to, yet independent of, the alleged code violation, Alden Leeds was charged with violating the specific notice provision of the APCA itself. That charge was based on N.J.S.A. 26:2C-19e. It provides:

A person who causes a release of air contaminants in a quantity or concentration which poses a potential threat to public health, welfare or the environment or which might reasonably result in citizen complaints shall immediately notify the department. A person who fails to so notify the ...


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