CSG Law Alert: Appellate Division Affirms DEP Enforcement Against Non-Discharging Property Owner
The Appellate Division has affirmed a $66,200 administrative penalty imposed by DEP against the owner of a shopping center constructed atop a closed municipal landfill. The unpublished and non-precedential decision in NJDEP v. Raritan Shopping Center LP found liability based on current ownership of the contaminated site, despite the landowner never discharging hazardous substances and conducting due diligence prior to purchasing.
Raritan purchased the property in 1993 after conducting environmental tests that discovered low levels of tetrachlorothylene (a common solvent also known as Perc) in the groundwater. The Perc was attributed to the closed landfill. In 2003, a prospective purchaser detected additional groundwater contamination, leading to the discovery and excavation of three buried steel drums. Thereafter, Raritan entered into an agreement to submit remedial reports to DEP. In 2004, Raritan submitted the required reports and requested a no-further action letter. DEP rejected Raritan’s request and instead requested submission of a remedial action workplan. In 2011, DEP advised Raritan of its remedial obligations. In 2014, DEP issued an administrative order requiring Raritan to remediate the groundwater contamination and assessing the $66,200 fine.
Raritan requested a hearing and the administrative law judge found in favor of DEP. On appeal, the Appellate Division affirmed based on a DEP regulation stating that Spill Act liability includes “subsequent owners of real property where the discharge occurred prior to the filing of [a no further action letter or response action outcome] with the Department.” N.J.A.C. 7:26C-1.4(a)(4). Curiously, the Appellate Division does not explain why DEP’s interpretation of Spill Act liability, a purely legal question, is entitled to deference. Rather, the decision cites to N.J. Schs. Dev. Auth. v. Marcantuone, 428 N.J. Super. 546, 559 (App. Div. 2012), which states that liability may exist for an owner who, unlike Raritan, purchased contaminated property without conducting due diligence. In this case, the innocent purchaser defense did not apply because Raritan’s due diligence detected the contamination.
Though unpublished, the decision demonstrates the Court’s deference to DEP’s expansive interpretation of environmental liability. Perhaps more practically, the case also demonstrates the prudence of remediating reported discharges while seeking contribution from those who discharged the hazardous substances.