Atlantic City Mun. Utilities Authority v. Hunt

• Decision Date: 02 May 1986
• Citation: 210 N.J.Super. 76,509 A.2d 225
• Parties: , 17 Envtl. L. Rep. 20,396 ATLANTIC CITY MUNICIPAL UTILITIES AUTHORITY, Plaintiff-Appellant, v. Robert E. HUNT, Administrator of the New Jersey Spill Compensation Fund, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 76

210 N.J.Super. 76

509 A.2d 225, 17 Envtl. L. Rep. 20,396

ATLANTIC CITY MUNICIPAL UTILITIES AUTHORITY, Plaintiff-Appellant, v. Robert E. HUNT, Administrator of the New Jersey Spill Compensation Fund, Defendant-Respondent.

Superior Court of New Jersey Appellate Division.

Submitted Dec. 18, 1985.

Decided May 2, 1986.

Slap, Williams & Cuker, Philadelphia, Pa., for plaintiff-appellant (John C. Matthews, Atlantic City, of counsel).

Irwin I. Kimmelman, Atty. Gen., for defendant-respondent (James J. Ciancia, Asst. Atty. Gen., of counsel, Karen L. Suter, Deputy Atty. Gen., on brief).

Before Judges KING, O'BRIEN and SIMPSON.

The opinion of the court was delivered by

KING, P.J.A.D.

This case raises important issues concerning the scope and retroactive application of the Spill Compensation and Control Act of 1976 (Spill Act). ¹ The site which commands our attention is Price's Landfill, located near wells which the plaintiff, Atlantic County Municipal Utilities Authority (MUA), operates. This landfill has been designated by the federal Environmental Protection Agency (EPA) as one of our nation's most dangerous hazardous waste sites. This action was brought by the Atlantic County MUA against defendant Hunt in his representative capacity as administrator of the Spill Fund, established by the Act, to recover cleanup and removal costs incurred because of the environmental hazard created at the landfill.

In the Law Division, Judge Perskie granted the Spill Fund's motion for summary judgment. He ruled that the Spill Fund was not available to the plaintiff for costs incurred for cleaning up discharges which took place before the Spill Act was passed and the Spill Fund created. He held that the Act applied to costs of cleanup of pre-Act discharge only if the costs were incurred by the New Jersey Department of Environmental Protection (DEP). He also found that the "discharge" at Price's Landfill, also called Price's Pit, occurred before adoption of the Act in 1976.

On this appeal, plaintiff challenges both conclusions. We agree with the Law Division judge and conclude that the strict liability provision of the Spill Act applies only to the cleanup costs of prospective spills for parties other than DEP and that the discharge here occurred in 1971 and 1972. We therefore affirm.

This is the procedural background. On July 1, 1983 plaintiff filed an amended claim with the Spill Fund seeking reimbursement under the Act, N.J.S.A. 58:10-23.11 et seq. for costs incurred as a result of the discharge of hazardous substances. Defendant denied the claim in July 1983 and suit was filed seeking declaratory relief. Plaintiff sought judgment declaring (1) that the fund was strictly liable, (2) an award of $946,217.15 in damages against the Fund, (3) that defendant acted in bad faith, and (4) attorneys' fees, interest and costs. Defendant Fund asserted immunity under the Tort Claims Act, N.J.S.A. 59:1-1 et seq., and denied responsibility under the Spill Act. On cross-motions for summary judgment, Judge Perskie granted defendant's motion.

This is the factual background. Many of the facts are derived from U.S. District Court Judge Brotman's opinion in United States v. Price, 523 F.Supp. 1055 (D.N.J.1981), aff'd 688 F.2d 204 (3d Cir.1982). Indeed, plaintiff MUA attached Judge Brotman's factual findings in United States v. Price to its claim form.

Price's Landfill is a 22-acre site located on the border of Pleasantville and Egg Harbor in Atlantic County. The owner, Charles Price, applied in 1970 for a permit to operate a landfill. He did not disclose in the application that he would dispose of solid and liquid chemicals. In 1971, Price began accepting chemical waste. He renewed his application in 1972 and then asked for permission to dispose of chemical waste. His permit was renewed but without permission to accept chemical waste.

Nevertheless, during 1971 and 1972 Price's Landfill accepted nine million gallons of industrial and chemical waste containing such contaminants as arsenic, lead and benzene. These wastes were either poured on the ground or buried in drums. There is, as yet, no evidence that the drums have corroded and released their contents. No chemical waste was dumped after 1972; Price's was closed to commercial waste after 1976.

Plaintiff MUA owns and operates the Atlantic City Water Department supplying over 10,000 commercial and public users. The water system has 15 wells and a reservoir. One of the wells is 3,400 feet east of Price's Landfill.

The Spill Act took effect on April 1, 1977. In 1979, EPA evaluated Price's Landfill for ground water contamination and its effect on the area's wells. EPA concluded that Price's should never have accepted hazardous wastes because of its proximity to water supplies. Some of the chemicals were carcinogenic. EPA determined that the contaminants were moving toward plaintiff's wells and at the current velocity would reach plaintiff's nearest well in a dozen years.

Plaintiff learned about this in December 1980 when the federal government filed United States v. Price. The United States sued the owner and former owner of Price's Landfill as well as a number of the source companies for the chemicals which were dumped there, alleging that they were liable under 42 U.S.C.A. § 300i and 42 U.S.C.A. § 6973. Plaintiff intervened in the suit in January 1981.

Plaintiff shut down four wells located in the area of Price's Landfill in March 1981. It also met with EPA and DEP to decide what to do. It decided to allow Paulus, Sokolowski and Sartor, an engineering consulting firm, to study the contamination problem and to make recommendations. Defendant denied that he approved this study which cost $356,816.

In the fall of 1981, plaintiff installed granular activated carbon filters in the main water filter plant to prevent the transmission of hazardous waste. According to plaintiff, DEP and EPA approved the installation of these filters. Defendant denied that he approved the installation of these filters which cost "in excess of" $256,000. Also in the fall of 1981, plaintiff hired Weston Associates to design a replacement well field. Plaintiff again claimed that EPA and DEP approved the Weston study. Again, defendant denied that he approved the study. Plaintiff paid $214,000 to Weston Associates for that study.

On September 23, 1981 Judge Brotman issued a written opinion in United States v. Price in which he denied the United States' motion for a preliminary injunction which would have required the then-owner of Price's Landfill to fund a study to determine the extent of the problem and to provide an alternate water supply. Plaintiff filed its first claim with the Spill Fund on either September 8 or October 18, 1982. It alleged that the discharge occurred in "May 1971 and [was] continuing to the present." The claim also stated that plaintiff had filed a separate civil suit against the defendants in United States v. Price. Plaintiff sought $466,000 allocated as follows: $356,000 for the Paulus, Sokolowski and Sartor study, $10,000 for legal fees and $100,000 for the filters. In response to the question of whether plaintiff had received any compensation for the clean-up costs claimed in the application, plaintiff answered "Yes. Through a Superfund (CERCLA) agreement certain monies are forthcoming, however, none of these monies cover the work that is being claimed in this application." Defendant's countering affidavit stated that he advised plaintiff's executive director that plaintiff MUA's claim could not be paid under the Act. His reason for denying the claim was that the "Act did not authorize payment of third-party claims for damages incurred as a result of discharges which occurred prior to April 1, 1977." On October 19, 1982 the Third Circuit affirmed the district court's decision in United States v. Price. 688 F. 2d at 204.

Plaintiff filed an amended damage claim on July 5, 1983. It sought $946,217: allocated $356,000 for the Paulus, Sokolowski and Sartor study; $255,901 for the filters, $214,000 for the Weston study and $119,000 for the staff time and legal fees. Defendant again orally advised plaintiff's executive director that plaintiff's claim was not eligible for payment. He also told plaintiff's executive director "that the only way this 'claim' might be paid from Spill Fund monies would be if the New Jersey Department of Environmental Protection requested an authorization of funds for a pre-Act cleanup and certified the expenditures by ACMUA [plaintiff] as a cleanup and removal contractor." "Sometime after" that conversation DEP submitted a voucher for the Weston study, which defendant paid using money from the fund.

Defendant's stated motivation for denying both claims was that it was "part of my duty as Spill Fund Administrator to determine whether a discharge is pre or post-Act." According to his consistent interpretation of the Act, only DEP could be paid for cleanup and removal costs incurred as a result of a discharge which occurred before the Act was passed. Moreover, even if DEP submitted vouchers, he contended that his decision to pay for pre-Act discharges was discretionary.

In his oral opinion, Judge Perskie decided that N.J.S.A. 58:10-23.11g(a), providing that the fund "shall" be strictly liable for all cleanup and removal costs and for all damages, was intended to be prospective "by its design, if not by its language." He found that amendments to the statute in 1979, discussed below, "were specifically designed to give to the Department [DEP] and, ... the Department only, access to this fund for the purpose of addressing pre-Act discharges."

The judge had already determined that at Price's Landfill "before and after the enactment of the statute, those wastes have leaked or leached into the land." Based on his interpretation of the word "discharge" to mean "placement," he decided that the discharge at Price's Landfill "occurred when the dumping...