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Lacey Municipal Utilities Authority v. New Jersey Department of Environmental Protection

June 04, 1998

LACEY MUNICIPAL UTILITIES AUTHORITY, PETITIONER-APPELLANT,
v.
NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION, ENVIRONMENTAL CLAIMS ADMINISTRATION, SPILL COMPENSATION FUND, RESPONDENT-RESPONDENT.



Before Judges Shebell, D'Annunzio and A.a. Rodr¡guez.

The opinion of the court was delivered by: Shebell, P.j.a.d.

[9]    Argued May 20, 1998

On appeal from the New Jersey Department ofEnvironmental Protection.

The opinion of the court was delivered by

This is an appeal from the January 3, 1995 denial by the Administrator of the Spill Compensation Fund (Fund) of two Spill Fund claims brought by the Lacey Municipal Utilities Authority (Lacey) on the ground that they were filed "later than one year from the date of discovery of damage" contrary to N.J.S.A. 58:10-23.11k. We reverse as to both claims and remand to the Fund for consideration of the merits of the claims.

On November 18, 1986, and January 6, 1987, a residential potable well located at 331 Constitution Drive, Lacey Township, in the area designated as MUA Zone 12, was discovered to contain benzene, a hazardous substance, in excess of the level established as acceptable for drinking purposes. Subsequent potable well water sampling found a total of thirteen (13) residential potable wells within Zone 12 to be contaminated with excessive levels of benzene, toluene, xylene and mercury, all hazardous substances. On February 28, 1991, petitioner filed a Spill Fund claim, seeking "reimbursement of costs incurred" by having its water supply lines extended into Zone 12.

In July, 1990, a residential potable well located in the Lanoka Harbor section of Lacey Township, in the area designated as MUA Zone 10, was discovered to contain trichloroethylene (TCE), a hazardous substance, in excess of the level established as acceptable for drinking purposes. Subsequent potable well water sampling found a total of twenty-five (25) residential potable wells within Zone 10 to be contami- nated with excessive levels of TCE, 1,1, dichloroethylene, 1,2, dichloroethylene, tetrachloroethylene and carbon tetrachloride, all hazardous substances. On June 22, 1992, petitioner filed a Spill Fund claim, seeking "reimbursement of costs incurred" by having its water supply lines extended into Zone 10.

On January 3, 1995, the administrator issued Notices of Intent to deny the claims citing N.J.S.A. 58:10-23.11k, which states that "Claims shall be filed with the administrator not later than one year after the date of discovery of damage." Lacey, in accordance with N.J.S.A. 58:10-23.11n, requested arbitration, and the matter was transferred to the Office of Administrative Law. A motion by the Administrator for summary decision was denied by the arbitrator and, on July 8 and 9, 1996, a hearing was conducted.

On December 18, 1996, the arbitrator issued his final decision. With respect to the primary issue in the case, namely, whether petitioner's claims were time-barred by N.J.S.A. 58:10-23.11k, the arbitrator noted that the "facts for purposes of that question were undisputed":

Petitioner sought reimbursement for two water projects within Lacey Township, known as zone 10, . . . and zone 12. . . . In July 1990 hazardous substances in excess of safe drinking water standards were discovered in zone 10. Petitioner solicited bids for a water extension project into this area on January 2, 1991, a contract was awarded on January 23, 1991, and construction began on May 2, 1991. The zone 10 claim was filed on June 22, 1992, and sought $181,834. The first contaminated wells were discovered in zone 12 during the latter part of 1986 and into 1987. Petitioner solicited bids for a water transmission main on November 20, 1989, the first contract was entered into on December 20, 1989, and construction began on February 18, 1990. Petitioner filed its zone 12 claim on February 28, 1991, seeking reim- bursement of $746,540.

Recalling his prior Conclusion in denying summary decision because "petitioner discovered its damage when it committed to supply water into zones 10 and 12 and that a clear manifestation of this commitment came when it contracted to extend water lines into these areas," the arbitrator repeated his Conclusion that "petitioner's zone 10 and zone 12 applications are untimely."

As to Lacey's assertion "that its prior dealings with respondent led it reasonably to conclude that claims would be reviewed without strict attention to the statute of limitations," the arbitrator noted that while it was "true that the then administrator used the com- mencement of construction as the discovery date of damage and thus interpreted the Act liberally to favor petitioner" with regard to its 1988 Spill Fund claims for Zone 2 and Zone 6, the arbitrator found that this did not suggest a waiver by the administrator of the one-year statute of limitations in N.J.S.A. 58:10-23.11k, or that the administrator "lulled . . . [Lacey] into believing that the statute of limitations would not apply." The arbitrator denied both of petitioner's claims, concluding "that petitioner's zone 10 and zone 12 applications were untimely and that respondent did not contribute to this in any substantial way."

I.

We first consider Lacey's contention, raised for the first time on appeal, that denial of the claims is "incorrect as a matter of law" because petitioner, "as a political subdivision of the State of New Jersey, has 10 years to pursue this civil claim in accordance with the clear and unambiguous language utilized by the Legislature in N.J.S.A. 2A:14-1.2." The New Jersey Department of Environmental Protection (DEP) responds that Lacey "cannot rely on N.J.S.A. 2A:14-1.2 to establish that it has ten years to file its . . . Spill Fund claims" because, in N.J.S.A. 58:10-23.11k, the Legislature "clearly and unmistakably established a one-year limitation period for the filing of Spill Fund claims." We agree.

N.J.S.A. 2A:14-1.2 (L. 1991, c. 387, § 2) provides as follows:

a. Except where a limitations provision expressly and specifically applies to actions commenced by the State or where a longer limitations period would otherwise apply, and subject to any statutory provisions or common law rules extending limitations periods, any civil action commenced by the State shall be commenced within ten years next after the cause of action shall have accrued.

b. For purposes of determining whether an action subject to the limitations period specified in subsection a. of this section has been commenced within time, no such action shall be deemed to have accrued prior to January 1, 1992.

c. As used in this act, the term "State" means the State, its political subdivisions, any office, department, division, bureau, board, commission or agency of the State or one of its political subdivisions, and any public authority or public agency, including, but not limited to, the New Jersey Transit Corporation and the University of Medicine and Dentistry of New Jersey. [Emphasis added.] ...


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