Kimber Petroleum Corp., Matter of

• Decision Date: 18 April 1988
• Citation: 110 N.J. 69,539 A.2d 1181
• Parties: , 27 ERC 1668, 56 USLW 2646, 18 Envtl. L. Rep. 20,933 In the Matter of the Directive of the New Jersey Department of Environmental Protection, Issued to KIMBER PETROLEUM CORPORATION, Shell Oil Company and Solar Oil Company.
• Court: New Jersey Supreme Court

Page 69

110 N.J. 69

539 A.2d 1181, 27 ERC 1668, 56 USLW 2646,

18 Envtl. L. Rep. 20,933

In the Matter of the Directive of the New Jersey Department of Environmental Protection, Issued to KIMBER PETROLEUM CORPORATION, Shell Oil Company and Solar Oil Company.

Supreme Court of New Jersey.

Argued Nov. 18, 1986.

Decided April 18, 1988.

Edwin R. Matthews, Short Hills, and Edward J. Farrell, Morristown, for appellants, Kimber Petroleum and Solar Oil Co. (Budd, Larner, Gross, Picillo, Rosenbaum, Greenberg & Sade, Short Hills, attorneys for Kimber Petroleum Corp., and Farrell, Curtis, Carlin & Davidson, Morristown, attorneys for Solar Oil Co.; Edwin R. Matthews, Short Hills, Edward J. Farrell, Morristown, John D. O'Dwyer and Nancy Giacumbo, Short Hills, on the briefs).

Ross A. Lewin, Deputy Atty. Gen., for respondent, Dept. of Environmental Protection (W. Cary Edwards, Atty. Gen., attorney; James J. Ciancia, Asst. Atty. Gen., and Michael R. Clancy, Deputy Atty. Gen., of counsel; Ross A. Lewin and John A. Covino, Deputy Attys. Gen., on the briefs).

James W. Christie, Princeton, submitted a brief on behalf of amicus curiae, Gloucester Tp. (Griffith, Burr, Angelini & Viniar, attorneys).

William H. Hyatt, Jr. and William J. Friedman, Morristown, submitted a brief on behalf of amici curiae, Woodland Study Group, Minnesota Min. and Mfg. Co. and Rohm and Haas Co. (Pitney, Hardin, Kipp & Szuch, attorneys).

The opinion of the Court was delivered by

HANDLER, J.

In 1984, the Department of Environmental Protection (DEP) investigated the source of a serious groundwater contamination in the Township of West Milford. The contamination was traced to an Amoco gasoline station leased by Kimber Petroleum Corporation and a Chevron gasoline station owned by Solar Oil Sussex at the time of the contamination. The groundwater contamination required residents of the Greenbrook Estates neighborhood to be connected to an outside water supply. Acting pursuant to the New Jersey Spill Compensation and Control Act, DEP directed Kimber Petroleum and Solar Oil to pay $2.16 million to fund the construction of an alternate water supply, failing which each would be subjected to treble damages. Kimber Petroleum and Solar Oil resisted payment of these costs, appealed to the Appellate Division, and moved for a stay of DEP's order exacting costs and imposing treble damages upon a refusal to pay. On July 31, 1986, the Appellate Division denied the motion for a stay pending appeal. On October 20, 1986, the Court certified the appeal pursuant to Rule 2:12-2 and ordered appellants to pay or to post security for the claimed costs of the removal but enjoined the imposition of treble damages.

I.

Kimber Petroleum and Solar Oil challenge the constitutionality of the New Jersey Spill Compensation and Control Act (the Spill Act), N.J.S.A. 58:10-23.11 to -23.11z. In particular, they assert that the Spill Act's treble damages provision violates the parties' due process rights under the federal and state constitutions.

The treble damages section of the Spill Act is as follows:

Whenever any hazardous substance is discharged, the [Department of Environmental Protection] may, in its discretion act to remove or arrange for the removal of such discharge or may direct the discharger to remove, or arrange for the removal of, such discharge.... Any discharger who fails to comply with such a directive shall be liable to the department in an amount equal to three times the cost of such removal ... [ N.J.S.A. 58:10-23.11f(a).]

The following section deals with the polluter's liability:

Any person who has discharged a hazardous substance or is in any way responsible for any hazardous substance which the department has removed or is removing ... shall be strictly liable, jointly and severally, without regard to fault, for all cleanup and removal costs.

An act or omission caused solely by war, sabotage, or God, or a combination thereof, shall be the only defenses which may be raised by any owner or operator of a major facility or vessel responsible for a discharge in any action arising under the provisions of this act. [ N.J.S.A. 58:10-23.11g(c), (d).]

Thus under these provisions a "discharger" is one who has "discharged a hazardous substance or is in any way responsible" for such a discharge. Id. The liability of a discharger is absolute--it is strict, "without regard to fault", and joint and several; only limited defenses not associated with fault--i.e., relating to war, sabotage or divine factors--are available. Id. See State, Dep't of Envtl. Protection v. Ventron Corp., 94 N.J. 473, 501-03, 468 A.2d 150 (1983) (liability under the Spill Act extends to parent corporation of wholly owned subsidiary that violated the Spill Act).

II.

At the outset we point out that DEP, in issuing the directives in this case, has not been acting within the language of the Spill Act as strictly interpreted. The Act directly authorizes DEP to take one of two alternative actions when it discovers illegally-dumped hazardous waste: 1) it can act to remove the waste (and then bring a cost-recovery action against the responsible parties, N.J.S.A. 58:10-23.11q), or 2) it can direct a responsible party to remove the waste. N.J.S.A. 58:10-23.11g(c), (d). In this case, DEP has done neither. DEP's directive to Kimber Petroleum and Solar Oil required Kimber Petroleum to pay the money necessary for the work DEP intended to undertake in the construction of an alternative water supply required by the local groundwater contamination. DEP did not seek relief by way of a cost-recovery action nor did it direct Kimber Petroleum and Solar Oil to do the work. This raises as a threshold question the validity of DEP's action in this case as a basis for treble damages. Though this issue was not fully raised by the parties, we believe it appropriate to deal with it at this time.

DEP's practice of requiring payment by responsible parties while maintaining control itself over remedial actions is not directly authorized by the Spill Act. ¹ Nevertheless, DEP's ability directly to undertake removal of a discharge, thereby assuring the elimination of toxic contamination while concomitantly securing removal costs from responsible parties, would appear to be highly necessary as a means of effective enforcement of the Spill Act. DEP has the discretion, implicit in its broad implied powers, to require responsible polluters to pay for cleanup or removal costs prior to remedial action. ² See New Jersey Guild of Hearing Aid Dispensers v. Long, 75 N.J. 544, 384 A.2d 795 (1978); cf. GATX Terminals Corp. v. State, Dep't of Envtl Protection, 86 N.J. 46, 52, 429 A.2d 355 (1981) (statutory power to clean up spills provides basis to prevent spills). We are satisfied that the practice is implicit in the broad authority granted the Department under the Spill Act and under the Department's own authorizing legislation, N.J.S.A. 13:1D-1 to -19.

III.

The United States Supreme Court has upheld the validity under the federal constitution of multiple damages provisions. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 584, 62 S.Ct. 1216, 1223, 86 L.Ed. 1682, 1691 (1942); Missouri Pac. Ry. Co. v. Tucker, 230 U.S. 340, 348-49, 33 S.Ct. 961, 962-63, 57 L.Ed. 1507, 1510 (1913); Missouri Pac. Ry. Co. v. Humes, 115 U.S. 512, 523, 6 S.Ct. 110, 114, 29 L.Ed. 463, 466 (1885). The Supreme Court regularly applies antitrust legislation, which, like the Spill Act, combines treble damages with joint and several liability. See, e.g., Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 101 S.Ct. 2061, 68 L.Ed.2d 500 (1981); Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976). The Sherman Antitrust Act has been interpreted in a way that those subjected to onerous joint and several liability provisions have no right of contribution. Texas Indus., supra.

The plaintiffs do not, however, claim that the Spill Act's treble damages provision, as such, is invalid. ³ Instead they point to the fact that this provision is only triggered when a DEP order is disputed and claim that this is unconstitutional because it serves to deter judicial challenge to state action.

In Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), the Supreme Court invalidated state rate-making legislation because the legislation permitted railroads to obtain judicial review of rates only as defendants in criminal prosecutions. The legislation violated due process because "the penalties for disobedience [were] by fines so enormous and imprisonment so severe as to intimidate [affected parties] from resorting to the courts to test the validity of the legislation." Id. at 147, 28 S.Ct. at 448, 52 L.Ed. at 724. With this type of legislation, "the result is the same as if the law in terms prohibited the [affected party] from seeking judicial construction of laws which deeply affect its rights." Id. If a challenging party has reasonable grounds for contesting the validity or applicability of an administrative order, it must be able to do so without penalty. See Ex parte Young, supra; Oklahoma Operating Co. v. Love, 252 U.S. 331, 338, 40 S.Ct. 338, 340, 64 L.Ed. 596, 599 (1920) (issuing permanent injunction restraining enforcement of penalties accruing during litigation "provided that the plaintiffs had reasonable ground to contest them"); Reisman v. Caplin, 375 U.S. 440, 84 S.Ct. 508, 11 L.Ed.2d 459 (1964).

The federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601 to 9657, has a provision similar to, but not identical with, the Spill Act's treble damages provision. 42 U.S.C. § 9607(c)(3) states:

If any person who is liable for a release or threat of release of a hazardous substance fails without sufficient cause to properly provide removal or remedial action upon order of the President pursuant to section 104 or 106 of this Act, such person may be liable to the United States for...