Environmental Law Update 2002: A review of the 2002 court year reveals a maturing of environmental law

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Title:
Environmental Law Update 2002: A review of the 2002 court year reveals a maturing of environmental law
Date:
October 21, 2002
Publication:
New Jersey Law Journal
Author(s):
Dennis J. Krumholz
Area(s) of Practice:
Environmental Law

New Jersey state and federal courts decided a significant number of cases during the past year (over 30) that addressed environmental issues. Notwithstanding the large number of opinions, however, no new significant legal principle was enunciated.

The courts generally applied settled principles of law to the facts of individual cases. In this respect, environmental decisional law may be said to be reaching a level of maturity similar to other settled areas of law in which the establishment of legal doctrine takes place slowly and incrementally.

Practitioners' familiarity with the field was illustrated by the fact that environmental issues appeared in a wider variety of circumstances involving a greater cross section of parties than in the past, when decisions largely involved corporate and industrial parties.

For example, in Magliarditi v. Passaic Beth Israel Hospital, et al (App. Div.) (A-2657-00T2), the court granted summary judgment to the defendants where the plaintiff, who had been sickened as a result of exposure to a bag of medical waste at the waste transfer facility where he worked, was unable to identify the particular bag of waste to which he was exposed. The court refused to apply the theory of alternate liability, which would have shifted the burden of proof to the defendants to show whose bag caused the injury.

RESIDENTIAL PURCHASE

Environmental considerations arose in two cases involving the purchase of a residence. In Kotkin, et al. v. Aronson, et al., (App. Div.) (A-5066-00T3), the court affirmed summary judgment for the buyer of a home who sought return of its deposit where, despite the seller's remediation of radon to a safe level” the contract of sale allowed the buyer to cancel the contract due simply to the presence of radon, without reference to an allowable level.

In drafting agreements of sale for residential properties, and certainly for commercial and industrial properties as well, it is therefore essential that the parties spell out the specific levels of contamination, if any, they are willing to accept.

In Leo Haus, Inc. v. Selective Ins., 353 N.J. Super. 67 (App. Div. 2002), the court held that the pollution exclusion provision in a home builder's commercial liability insurance policy relating to sudden and accidental releases plainly and unambiguously excluded coverage for personal injuries suffered by the homeowner as a result of the discharges of carbon monoxide from the heating system over a one-year period. The court had no trouble concluding that carbon monoxide was a discharged pollutant under the terms of the policy.

In Diversified Fin. Servs. Group, Inc. v. E.I. du Pont DeNemours & Co., Inc., etc., 174 N.J. 190 (2002), the plaintiffs bought a home and subsequently discovered a plume of contamination in the groundwater beneath their property that was caused by, and was migrating from, the defendant's operations. The Court found that the plaintiffs had failed to establish damages as a result of the contamination because the opinion of their expert was a "net" opinion unsupported by facts and methodology.

This holding may have broader significance, however, to the extent it supports the proposition that mere presence of contaminated ground water is not an injury to property resulting in "stigma" or other damages where the home is connected to and uses a municipal water supply.

In Devon Manor of Kearny, Inc. et al. v. Estate of Cassini Jr. et al., 171 N.J. 43 (App. Div. 2001), the Court affirmed dismissal of a complaint brought by the current property owner against a predecessor in title seeking recovery of cleanup costs because the plaintiff's expert reports failed to link the prior owner to the contamination.

The plaintiff's reports extensively documented the presence of metals in the nonindigenous fill at the site, but none of the reports provided any connection between the contamination and the predecessor in title. Ultimately, the court concluded that the contamination was "historic fill" for which the defendant was not responsible.

One case in which the plaintiff ultimately may prevail is Daum v. Mobil Oil Corp., 803 A.2d 638 (2002), in which the Court sensibly reversed the grant of summary judgment to the defendant from a claim by the plaintiff for the cost of environmental remediation.

Although the plaintiff's expert was unable to identify the source of contamination "to a reasonable degree of scientific certainty," nonetheless, a significant amount of circumstantial evidence supported the expert's opinion such that a jury could resolve the issue of the source of the contamination in favor of the plaintiffs.

Importantly, the court accepted the notion that the expert would be in a position to offer a more definitive opinion after performing additional investigatory work. This case illustrates the dilemma facing plaintiffs in deciding at what stage in the remedial process to institute their claims” whether to refrain until more data enables an expert to render a stronger opinion but incur additional costs in the process, or to proceed with weaker evidence but without spending additional monies.

QUESTIONABLE CONDUCT

Courts this year showed little sympathy to plaintiffs whose own conduct was objectionable. In Atlantic City Airport Travel Lodge v. NJDEP (App. Div.) (A-1442-00T1), the court denied Spill Fund compensation to the plaintiff-motel owner who had failed to conduct due diligence at the time of purchase of contaminated property which would have alerted him to the presence of contamination. The court found that conditioning Spill Fund payments on proof of sufficient due diligence on the part of innocent purchasers was a valid exercise of NJDEP power, even where the purchase was made prior to statutory codification of due diligence standards.

Although the owners of a mobile home and mobile home park were each responsible parties in a Spill Act contribution action, the court in A-Bove Environmental Svcs., Inc. etc. v. Purputo, etc. (App. Div.) (A-455-00T3), found the underground storage tank servicing the mobile home to be the mobile home owner's personalty under the facts of the case and, as a result, held her fully liable for discharges from the tank.

The court gave full effect to the operative contractual provisions in the lease renewal between the parties pertaining to responsibility for the tank and did not hesitate to exculpate a party otherwise responsible under the Spill Act. This case is significant in that the court held a party to be responsible under the Spill Act but also to have zero liability.

In an interesting case involving a statute of limitations, Palin Enterprises, etc. v. Kimberly-Clark Corp., etc. et al. (App. Div.) (A-6759-99T2), the court reversed dismissal of a claim for insurance coverage for cleanup costs that the lower court had determined had been brought beyond the six-year statute of limitations. The facts in the case illustrate the difficulty of ascertaining when knowledge of environmental harm — in this case the offsite migration of contamination — has or should have arisen, and the case was remanded for a Lopez hearing for the trial court to make this determination.

DEP POWER

As in the past, numerous environmental decisions this year illustrate the continuing deference given by our courts to the routine exercise of authority by the New Jersey Department of Environmental Protection.

In Edison Wetlands Ass'n., Inc. v. NJDEP, et al. (App. Div.) (A-3681-00T3), the Appellate Division affirmed dismissal of the Environmental Rights Act complaint brought by an environmental group against the DEP and an alleged polluter where an administrative consent order had been entered into to address the discharge and the DEP had been endeavoring to enforce its terms.

In easily reaching its conclusion, the court was persuaded by the fact that no injury to property owned by the plaintiff was alleged.

Similarly, in I/M/O Freshwater Wetlands Protection Act Rules, etc., 351 N.J. Super. 362 (App. Div. 2002), also over a challenge by environmental groups, the court concluded that the DEP had properly promulgated an administrative rule authorizing the expansion of cranberry-growing bogs in the Pinelands.

The Court sided with the DEP in Interstate Envtl. Comm'n v. NJDEP, et al., 803 A.2d 634 (2002), and held that the agency was not restricted in its regulatory functions and could require the Passaic Valley Sewerage Commission to comply with water quality standards enacted by the Interstate Environmental Commission as a condition of its pollution discharge permit.

In Town of Kearny v. Hackensack Meadowlands Dev. Commission, et al., 344 N.J. Super. 55 (App. Div. 2001), the court viewed DEP jurisdiction expansively and held that the agency has the exclusive authority, without the concurrent jurisdiction of the Law Division, to determine whether a town is entitled to host community benefits for an access road leading towards a waste transfer facility.

In National Transfer, Inc. v. NJDEP, 347 N.J. Super. 401 (App. Div. 2002), the Appellate Division upheld summary decision issued in the Office of Administrative Law in favor of the DEP when the agency assessed a $1.1-million penalty against a waste transfer facility for receiving quantities of waste in excess of its permit limitation.

The court found unpersuasive the arguments of the permittee that it had never received that page of its permit setting forth its daily weight limit and that the DEP was estopped from levying a penalty where different bureaus within the agency had not always properly coordinated their activities.

The Supreme Court of New Jersey also held for the agency when it determined, in New Jersey Dep't of Envtl. Protection v. Caldeira Jr. et al, 171 N.J. 494 (2002), that the 10-year statute of limitations, generally applicable to actions brought by the state, should apply to an action arising under the Uniform Fraudulent Transfer Act for a fraudulent transfer in a landfill closure matter.

The Court declined to apply the four-year/one-year statute of limitations in the UFTA nor the newly enacted three-year statute of limitations in N.J.S.A. 58:10B-17.1(a) applicable to a civil action concerning the remediation of a contaminated site or the closure of a sanitary landfill commenced by the state pursuant to environmental laws, holding that the 10-year statute would apply to any civil action brought by the state unless a limitation provision in a particular statute expressly and specifically applied, which was not the case here.

Notwithstanding deference to more routine agency decisions, it is important to keep in mind that, as in past years, courts will not hesitate to invalidate more significant actions when the DEP plainly fails to act in accordance with law.

This year, the Appellate Division reversed the DEP's adoption of new water quality and watershed management rules because the adopted version substantially differed from the version of the rules previously offered for public review and comment and the agency had failed to provide new notice or public hearing as required by the Administrative Procedure Act.

Because only a tiny fraction of the originally-proposed 35 pages of regulations ultimately was adopted, the Appellate Division concluded that the changes in the proposed rule were so substantial as to "destroy the value of the original notice." In re: Adopted Amendments: N.J.A.C. 7:15-8, 349 N.J. Super. 320 (App. Div. 2002).

INVOLVED CITIZENS

In an apparent throwback to earlier years, citizen and environmental groups were very active in environmental litigation this past term, appearing in a relatively large number of cases. No particularly novel decisions arose out of claims advanced by these groups, whereas in the past environmental groups had been in the forefront of cases that expanded the boundaries of environmental law.

The one case that broke new ground when it was first brought ended this term when the 3rd U.S. Circuit Court of Appeals issued its ruling in the case of South Camden Citizens in Action, et al. v. New Jersey Dep't of Envtl. Protection, et al., (A-5646-99T2).

The court held that the Environmental Protection Agency's disparate impact regulations promulgated pursuant to Title VI of the Civil Rights Act did not create rights enforceable by a private party under § 1983 of the Civil Rights Act. In so doing, the court dissolved an injunction against the operation of a cement plant issued by the district court, allowing the plant to operate.

As illustrated in the Edison Wetlands Ass'n. and Freshwater Wetlands Protection Act Rules decisions cited above, environmental groups fared poorly in challenges to the actions of government agencies.

In American Littoral Society, et al. v. U.S.E.P.A., et al., 199 F.Supp. 2d 217 (D.N.J. 2002), the court disagreed with the environmental plaintiffs, determining that the EPA did not fail to perform certain mandatory statutory duties and that the agency's decisions with respect to approval of New Jersey's deficient water quality lists and oversight of New Jersey's Total Maximum Daily Load program were not invalid.

In I/M/O Application of Mercer Cty., etc. (A-6589-98T3), over the objection of three environmental advocacy groups, the court affirmed the final decision of the State House Commission to divert land from the Green Acres program to use by New Jersey Transit in exchange for preservation of a larger tract of land of substantially greater value. The court held that federal law (which under the National Environmental Policy Act required an analysis of project alternatives), was not applicable to the Green Acres law.

In I/M/O Protest of Coastal Permit Program Regulations (A-3498-99T3), the court again upheld, with several exceptions and over the challenges of environmental and trade groups and others, the validity of regulations promulgated by the DEP pursuant to Coastal Area Facility Review Act.

Environmental groups did enjoy one success and a partial victory. In I/M/O Amendment to Recreation and Open Space Inventory of . . . Plainfield etc. (App. Div.) (A-2979-01T3), an environmental group successfully overturned DEP approval of the removal of a parcel of land from Plainfield's inventory of recreational and open space where Plainfield had accepted a Green Acres grant of public funds to develop the parcel into a public park and had acknowledged and condoned extensive public and recreational use of the parcel over eight years.

And in Interfaith Community Organization et al. v. Honeywell International, Inc. et al., 215 F. Supp. 2d 482 (D.N.J. 2002), although the court declined to grant summary judgment to the plaintiff citizen groups on the issue of the defendants' liability as a matter of law under the Resource Conservation and Recovery Act for the disposal of hazardous waste, the court did determine that the plaintiffs had standing to pursue their claims for declaratory and injunctive relief because they resided and worked in the vicinity of the site, frequently drove by it and sometimes shopped nearby.

CONDEMNATION

Finally, in a case of significant interest to condemning agencies, the Appellate Division upheld use of environmental reservation clauses in condemnation actions brought by the state and state agencies. New Jersey Transit Corp etc. v. Cat in the Hat, LLC, et al., 353 N.J. Super. 364 (App. Div. 2002).

These clauses preserve the state's right to recover cleanup costs from former owners if an environmental investigation undertaken following closing reveals the presence of contamination. In so doing, the preclosing due diligence obligations of the condemning agency were significantly reduced and the assessment of environmental costs was deferred until the remediation was performed.

Certification to the New Jersey Supreme Court has been sought, perhaps because of the significant advantage the decision affords to condemning authorities whose incentive to reduce environmental costs is substantially eliminated if they are able to recover actual costs expended.

This year marked the return of citizen and environmental groups to environmental litigation but without much success or the advancement of novel claims. Continued deference to the DEP in routine matters, but vigilance in reviewing more significant agency actions, remains a hallmark of our jurisprudence.