ENVIRONMENTAL LAW

Cleanup Liability of "Current Owner"

In Marsh v. New Jersey Spill Compensation Fund & Environmental Claims Administration, 286 N.J. Super. 620, 670 A.2d 67 (App. Div. 1996), the New Jersey Superior Court, Appellate Division, clarified the circumstances when a property owner can be held liable for environmental compensation under the New Jersey Spill Compensation and Control Act, N.J. Stat. Ann. §§ 58:10-23.11 et seq., one of the broadest state hazardous substances cleanup legislation in the country.

In Marsh, a property owner applied for reimbursement of cleanup and removal costs from the state Spill Fund, but was denied reimbursement by an arbitrator on the ground that she was responsible for the pollution by virtue of her status as current owner of the property.

On appeal, the Appellate Division reversed, holding that property ownership alone, even during a period when a discharge of hazardous substances occurs, is not sufficient to make a property owner liable. Although under the Spill Act parties even remotely responsible for contamination are held liable for remediation costs, the Appellate Division held that there must exist proof of some further action or omission by the owner that has contributed to the discharge.

The court reasoned that this causal connection could be demonstrated by proof that the owner knew or should have known of a discharge but failed to take preventive measures or remedial action. In Marsh, the court found that the causal connection could be established by proof that Marsh should have known before she acquired title by gift that the property was likely to be the site of buried, leaking underground storage tanks, that more than a de minimis discharge had occurred, and that she failed to remediate promptly the problem.

The court further observed that for property transfers occurring after September 14, 1993, a statutory amendment imposes a stricter standard of liability. A purchaser who acquires title after September 14, 1993 must show that it gave notice to the Department of Environmental Protection immediately after learning of the discharge and that before acquiring title the purchaser made all appropriate inquiries into the previous ownership and uses of the property. N.J. Stat. Ann. § 58:10-23.11g(d)(2).

Steven Shareff

Senior Attorney, Environmental Law

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