On March 27, the New Jersey Supreme Court, in NL Industries, Inc. v. New Jersey, addressed three issues under the Spill Act:
- the State of New Jersey's sovereign immunity from liability for any hazardous substance discharge that occurred before the Spill Act's original effective date of April 1, 1977;
- the State's non-liability for regulatory actions; and
- the non-applicability of Tort Claims Act requirements to claims against public entities.
The case involves contamination of the Laurence Harbor shoreline in the Raritan Bay. To protect the harbor from erosion, the Army Corps built a levee and placed beach fill on riparian land owned by the State. To further protect the harbor from erosion, the Natural Resources Council of the New Jersey Department of Environmental Protection ("NJDEP") made a riparian land grant to Sea-Land Development Corporation ("Sea-Land") to construct a seawall. Sea-Land completed the project during the early 1970s, using industrial slag on the seawall and on a jetty previously built by the Army Corps. The seawall was partially located on land owned by Sea-Land and land owned by the State. In 2013, EPA issued a Record of Decision selecting a $79 million remedy for contamination in Raritan Bay that included cleanup of the seawall and jetty. In 2014, EPA demanded that NL Industries remediate the site based on the assertion that some of the slag in the harbor had come from its Perth Amboy factory.
NL Industries Sues the State
NL Industries filed a state court action seeking contribution from the State under the Spill Act, alleging that the State caused or contributed to the Raritan Bay contamination in its role as a riparian landowner and as a regulator that had failed to address the discharges when made. The State moved to dismiss the complaint on several grounds, which included the arguments that its sovereign immunity foreclosed the action and that NL Industries had failed to comply with the Tort Claims Act. The trial court denied the motion, holding in part that the State had abrogated its immunity from Spill Act suits and that the Tort Claims Act did not apply. The Appellate Division affirmed, and the Supreme Court granted the State's motion for leave to appeal. The Supreme Court reversed.
First, the Court held that while the State had abrogated its sovereign immunity for suits under the Spill Act arising from certain circumstances, it remained immune from suits based on discharges that occurred before the legislation's effective date. Citing prior case law, the Court held that sovereign immunity protects the State from private suits for money damages unless it has "clearly and unambiguously" waived that protection. Where that waiver is to apply retroactively—such as here, where the discharges pre-dated the Spill Act—it "requires the clearest of expression." The State had indeed abrogated immunity in the original Spill Act by providing for liability by any "person" responsible for a discharge and by defining "person" to include "the State," an inclusion that has never changed. But the Spill Act originally was not retroactive; when the legislation was later amended to make it retroactive, there was no clear and unambiguous statement waiving the State's immunity retroactively.
Dissenting, Justice Albin agreed with NL Industries that the Spill Act's plain language currently defines "person" to include the State, and makes "persons" liable for pre enactment discharges. But the majority responded that where sovereign immunity is involved, a clearer waiver was necessary. Relatedly, the Court noted in dicta that the State would also likely be immune from suit for its regulatory activities. The Spill Act's history showed no evidence of clear intent to retroactively abrogate immunity for the State's discretionary acts in its role as a sovereign.
In another important holding, the Court found the procedural requirements of the Tort Claims Act inapplicable to Spill Act suits against the State. The Tort Claims Act bars suit against public entities for certain injuries unless the plaintiff has first provided notice of its alleged injury within 90 days of occurrence, and further restricts filing of suit for six months after the notice. However, the two acts were enacted "at different times" and for "different reasons," and therefore the requirements of the former should not apply to suits under the latter.
NL Industries makes Spill Act claims against the State more complicated. The dissent noted that, as Spill Act liability is joint and several, the Court's decision could leave a private party solely liable for cleanup costs where it is sued alongside the State in a case involving pre-enactment discharges. Therefore, it will be important for private parties to have some basis to allege that at least some of the discharges occurred after the effective date of the Spill Act.
Please contact the attorneys listed on this alert for further information on the matters discussed herein.