NL Indus., Inc. v. State

• Court: New Jersey Supreme Court
• Writing for the Court: JUSTICE LaVECCHIA delivered the opinion of the Court.
• Citation: NL Indus., Inc. v. State, 228 N.J. 280, 156 A.3d 1043 (N.J. 2017)
• Decision Date: 27 March 2017
• Parties: NL INDUSTRIES, INC., Plaintiff–Respondent, v. STATE of New Jersey, Defendant–Appellant.

228 N.J. 280

156 A.3d 1043

NL INDUSTRIES, INC., Plaintiff–Respondent,

v.STATE of New Jersey, Defendant–Appellant.

Supreme Court of New Jersey.

Argued October 26, 2016

Decided March 27, 2017

David S. Frankel, Deputy Attorney General, argued the cause for appellant (Christopher S. Porrino, Attorney General of New Jersey, attorney; Melissa H. Raksa, Assistant Attorney General, of counsel).

Christopher R. Gibson argued the cause for respondent (Archer & Greiner, attorneys; Mr. Gibsonand Patrick M. Flynn, on the briefs).

JUSTICE LaVECCHIA delivered the opinion of the Court.

Plaintiff NL Industries, Inc. (NL), filed a claim against the State of New Jersey seeking contribution under the New Jersey Spill Compensation and Control Act (Spill Act), N.J.S.A. 58:10–23.11 to –23.24, for environmental-contamination cleanup costs for a site in the Laurence Harbor region of Old Bridge Township. The claim is based on State activity that occurred prior to enactment of the Spill Act. NL alleges that the State was responsible for pollutant discharge for two reasons: first, because the State was the owner of riparian land that became contaminated and polluted the Laurence Harbor shoreline; and second, because the State, acting as a regulator through the New Jersey Department of Environmental Protection (NJDEP), approved action related to the property of a third party that similarly is alleged to be responsible for the Laurence Harbor contamination.

The State unsuccessfully sought dismissal of NL's claim. This appeal is before us based on our grant of the State's motion for leave to appeal raising novel questions. The fundamental issue is whether the Spill Act retroactively abrogated the State's sovereign immunity for state action taken prior to the Act's 1977 effective date. If we determine that the State can be liable for its activities during the pre–Spill Act time period, then we must decide two other questions that are presented in this appeal: whether the State can be liable under the Spill Act for actions taken as a regulator; and whether State liability under the Spill Act must be harmonized with the New Jersey Tort Claims Act (TCA), N.J.S.A. 59:1–1 to 12.3, which, among other things, provides the State with immunity from tort claims for certain categories of discretionary activities.

There is no dispute in this appeal that, effective with enactment of the Spill Act, the State is responsible under the Act for its discharges because the State is included in the Spill Act's definition of a "person" potentially liable. N.J.S.A. 58:10–23.11b. The contest here centers on whether a series of subsequent amendments made to the Spill Act, which allowed the Act some retroactive application and which created opportunities for private contribution actions, have rendered the State liable for activities that occurred before the Act became effective.

Based on careful review of the Act as enacted and as serially amended, we conclude that the Spill Act contains no clear expression of a legislative intent to waive the State's sovereign immunity retroactively to cover periods of State activity prior to the Spill Act's enactment. Absent a clear and specific indication that the Legislature intended to impose a retroactive liability that could have profound impact on the fiscal affairs of the State, retroactive waiver of the State's sovereign immunity for Spill Act contribution claims concerning pre–Act activities will not be inferred.

Therefore, on the fundamental issue in this appeal, we hold that the State's sovereign immunity prevails against Spill Act contribution claims based on State activities that occurred prior to the original effective date of that Act. The judgment of the Appellate Division is reversed, and this matter is remanded to the trial court for proceedings consistent with the holding of this Court.

I.

Because this case comes before us on interlocutory appeal from the denial of the State's motion to dismiss plaintiff's complaint, we rely on facts gleaned from the pleadings.¹ This matter is factually and procedurally complex; we recite those facts and procedural steps that are necessary to place the legal issue in context.

A.

The case concerns the contamination of the Laurence Harbor shoreline, a part of Raritan Bay, in Old Bridge Township (Township). In the early 1960s, the State of New Jersey, along with the Township, retained the services of the United States Army Corps of Engineers (Army Corps of Engineers) to build structures to protect the Laurence Harbor beach from erosion. One such protective measure included the building of a levee and the placement of beach fill on riparian land owned by the State. The Army Corps of Engineers completed the project in 1966.

In September 1968, Sea–Land Development Corporation (Sea–Land), which had earlier acquired land in Laurence Harbor for development, notified the State of its plans to protect Laurence Harbor from future erosion by the construction of a seawall, which would be made partly with "slag," an industrial byproduct. Sea–Land needed a grant of riparian land from the State in order to construct its wall.

In December 1969, the Natural Resources Council of the NJDEP approved a riparian land grant to Sea–Land subject to several conditions, including that Sea–Land build a beach, consistent with Army Corps of Engineers regulations, and allow public access to the beach.² At around the same time, acting through the NJDEP, the State, with the approval of the Township and the Army Corps of Engineers, issued a permit to Sea–Land to build the seawall. Sea–Land accepted the conditions of the riparian grant in 1970 and, thereafter, began construction.

Sea–Land completed the project during the early 1970s, using slag on both the seawall and an existing jetty that the Army Corps of Engineers had constructed during the 1880s. The seawall was situated on land owned by Sea–Land as well as land owned by the State, and the State held, and still retains, an ownership interest in the jetty.

During the construction, a Township official informed the Chief of the NJDEP Bureau of Solid Waste Management that slag was being dumped into Raritan Bay. During the fall of 1972, various divisions of the NJDEP examined the reported information and, in March 1973, the State, the Township, and the Army Corps of Engineers met to discuss the slag issue. At the time, the State acknowledged ownership of some of the land on which Sea–Land built the seawall; from the record, it does not appear that further action was taken at the time.

In 2007, the NJDEP detected contamination along the seawall in Laurence Harbor. The NJDEP reported its findings to the United States Environmental Protection Agency (EPA) in June 2008. The EPA investigated and then, in 2009, placed Laurence Harbor on a national list of contaminated sites. In May 2013, the EPA issued a Record of Decision on the matter, selecting a cleanup and removal remedy for the hazardous material in Raritan Bay, including the Laurence Harbor seawall and jetty, that was estimated to cost $79 million overall.

In January 2014, the EPA³ demanded that NL, which had operated a factory in Perth Amboy that created slag as a byproduct, remediate the site based on the assertion that Sea–Land had obtained from NL slag used in the Laurence Harbor projects. NL thereafter filed a state court complaint seeking contribution from the State under the Spill Act, alleging that the State caused or contributed to the Raritan Bay contamination in its roles as regulator and riparian landowner.

B.

Procedurally, NL's claim unfolded through motion practice. With discovery not yet completed, the State filed a motion to dismiss NL's claim based on: (1) sovereign immunity; (2) the common law immunities codified in the TCA, as well as the TCA's procedural protections; and (3) NL's failure to state a claim against the State.⁴

The trial court denied the State's motion. NL Indus., Inc. v. State , 442 N.J.Super. 428, 449, 124 A .3d 257 (Law Div. 2014), aff'd , 442 N.J.Super. 403, 124 A .3d 242 (App. Div. 2015). First, the court determined that the Spill Act provided a clear and unambiguous waiver of the State's sovereign immunity. Id. at 442, 124 A .3d 257. The court noted that the State is listed as a potentially liable "person," and that the Legislature did not "immunize or exclude" the State from the list of "persons" from whom a discharger may seek contribution when amending the Act in 1991 to allow for contribution actions. Ibid. For further support, the trial court relied on Department of Environmental Protection v. Ventron Corp. , 94 N.J. 473, 468 A .2d 150 (1983), in which Spill Act liability was imposed for the pre-enactment activities of private responsible parties sued by the NJDEP to recover costs expended by the Spill Fund to clean up those private parties' pre–Act discharges. Id. at 441, 124 A .3d 257. The trial court cited Ventron for the proposition that this Court has recognized a legislative intent that the Act be applied retroactively. Ibid. Combining the Act's abrogation of sovereign immunity with that interpretation of Ventron 's holding, the trial court concluded that the State's sovereign immunity from liability for pre–Act discharges was waived. Id. at 441–42, 124 A .3d 257.

Second, the trial court declined to read the Spill Act in pari materia with the TCA and accordingly refused to bar NL's claim based on noncompliance with the TCA's procedural requirements. Id. at 446–47, 124 A .3d 257. The court found that the two statutes "were enacted at different times for demonstrably different reasons." Id. at 445, 124 A .3d 257. Determining it unnecessary to harmonize the two statutory schemes, the court declined to graft onto the Spill Act the immunities and procedural protections of the TCA. Id. at 446–47, 124 A.3d 257.

Finally, the trial court held that NL's factual allegations established a reasonable nexus between the State's conduct and the slag contamination and rejected the State's argument that...