The New Jersey Supreme Court has ruled that the New Jersey Department of Environmental Protection (NJDEP) could not obtain damages under the state’s Spill Compensation and Control Act (Spill Act) for dry-cleaning chemicals found in groundwater near a dry-cleaning operation because the state could not demonstrate a nexus between the operations and the contamination. NJDEP v. Dimant, No. 67993 (N.J. 9/26/12).

The defendant operated under the name Sue’s Clothes Hanger (Sue’s) in a strip mall that contained both Sue’s operation and a full-service dry cleaner. Before it became Sue’s, the property had operated as a laundry and dry-cleaning business, with two dry-cleaning machines operating in a closed-loop system. In 1987, the business changed hands and became Sue’s. The primary operation remained a self-service laundry, but Sue’s continued to use the two dry-cleaning machines a few times per week for approximately 15 months.

In 1988, an NJDEP inspection of Sue’s and the adjoining full-service dry-cleaning operation identified a drip emanating from Sue’s through a heat-transfer pipe onto the asphalt pavement outside and confirmed that the drip contained perchloroethylene (PCE). It also found that while PCE was present in an indoor pit at Sue’s, the pit was not leaking. NJDEP took no further action then on Sue’s PCE releases, and the court found it meaningful that the inspection report did not suggest that Sue’s PCE drip had damaged the asphalt pavement.

After the discovery of groundwater contamination in the area, an NJDEP geologist wrote a report in 2000 concluding that both the full-time dry cleaner and Sue’s had contributed to the presence of PCE in the groundwater. The NJDEP sued a number of defendants, including Sue’s, the adjacent dry cleaner and other nearby dry cleaners to recover cleanup costs under the Spill Act. At trial, Sue’s was the only remaining defendant. The trial court held that NJDEP had not established that a PCE release from Sue’s contributed to the presence of PCE in the groundwater and dismissed the claim. The appeals court affirmed, and NJDEP sought review by the state supreme court, “claiming that the trial and appellate courts misperceived the nexus required for liability under the Spill Act,” and impermissibly imposed a common-law causation standard under the act.

The court concluded that the Spill Act’s definition of a release contains no de minimis exemption and that the drip from Sue’s constituted a release. The Spill Act, said the court, does not define the causation required to impose liability; it simply states that DEP “need prove only that an unlawful discharge occurred which was the responsibility of the discharger.” Reviewing both the statute and legislative history, the court determined that to recover cleanup costs the defendant “must be shown to have committed a discharge that was connected to the specifically charged environmental damage of natural resources—the groundwater damage—in some real, not hypothetical, way.” It also concluded that the nexus must be demonstrated by a preponderance of the evidence. To obtain injunctive relief, however, merely requires proof of the existence of a discharge.

The New Jersey Supreme Court found no reason to disturb the determination below that DEP “failed to connect the discharge from the pipe during Sue’s operation, to the soil or groundwater damage” involved. Observing that the claims were not for remediation of contaminated asphalt in the area of the drip, the court agreed that the absence of proof of a means by which the Sue’s drip could have contaminated groundwater required dismissal of NJDEP’s claims.