Sovereign Immunity Protects New Jersey From Spill Act Liability

New Jersey's Spill Compensation and Control Act (the Spill Act) turns 40 this year.1 The defining feature of the Spill Act is its prohibition on any unpermitted discharges of hazardous substances.2 Because it imposes strict liability on dischargers and persons in any way responsible for discharges, limits defenses to acts of war, sabotage and acts of God, and includes a private right to seek contribution from other responsible parties, the Spill Act has prompted numerous environmental cleanups. However, after four decades, there are still many contaminated sites in the Garden State awaiting investigation and cleanup. As a result, the Spill Act is increasingly called upon to address regional situations ranging from groundwater pollution impacting entire aquifers to watershed-wide sediment contamination. In recent years, the Spill Act and its federal counterpart, the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),3 have been applied to complex environmental problems related to urbanization and widespread industrial activities rather than unpermitted discharges from a single facility. Not surprisingly, the cost to remediate these regional problems can be staggering.4 If these 'mega-sites' are to be resolved in an efficient and cost-effective manner, all potentially responsible parties, including the government, will need to contribute their fair share. It is this backdrop that renders the New Jersey Supreme Court's March 27, 2017 decision in NL Industries, Inc. v. State of New Jersey5so perplexing.

The cleanup in NL is precisely the type of novel problem that the Spill Act and CERCLA are now routinely expected to address. The "site" at issue in NL is not a factory or landfill, rather it is the shoreline of Raritan Bay including a seawall and jetty that were apparently first developed by the federal Army Corps of Engineers (ACOE) in the 1880s on land partially owned by the State of New Jersey. In 1966, the ACOE rebuilt the jetty and created a public beach. Three years later an unrelated commercial party agreed to install additional improvements intended to protect the public beach from erosion. These improvements included construction of a new seawall and reinforcement of the jetty using industrial slag. Both the ACOE and the State of New Jersey (acting through the Department of Environmental Protection (DEP)) approved this plan. Thirty-five years after it approved the placement of industrial slag on its property...