Manufacturers Who Sold Hazardous Substances To A Discharger Could Face Spill Act Liability

• Published date: 06 May 2022
• Subject Matter: Environment, Environmental Law
• Law Firm: Riker Danzig Scherer Hyland & Perretti
• Author: Mr Michael S. Kettler

In the decades since its adoption in the 1970s, the New Jersey Spill Compensation and Control Act (the "Spill Act"), N.J.S.A. 58:10-23.11 et seq., has not been understood to impose liability on the sellers of chemicals that a purchaser later discharged into the environment. However, in a pair of recent decisions, New Jersey federal judges entertained the novel theory that the manufacturer and seller of a chemical could be strictly liable for a discharge to the environment under the Spill Act, even if the manufacturer merely sold the chemical to a third party that actually caused the contamination. If this interpretation of the Spill Act becomes widely accepted, the scope of environmental liability in New Jersey would expand significantly, and parties that previously had not faced Spill Act liability could find themselves facing a bevy of new lawsuits for the costs of cleaning up contaminated sites.

The New Jersey Department of Environmental Protection ("NJDEP") seemingly initiated this trend in 2019 when it issued a "statewide directive" under the Spill Act ordering several companies to, among other things, "discuss [with NJDEP] a good faith estimate" of the costs of investigating and remediating per- and polyfluoroalkyl substances ("PFAS") in the environment throughout New Jersey and also to "discuss" the establishment of a remediation funding source by these companies to fund these costs. NJDEP included among the recipients of its directive 3M Corp., which had manufactured PFAS and sold them to various manufacturers with operations in New Jersey. However, NJDEP did not allege that 3M had discharged PFAS. The Department's inclusion of 3M raised eyebrows because no party had been held liable under the Spill Act merely for selling a chemical that was later discharged to the environment by a third party. And federal courts had long held, culminating in the U.S. Supreme Court's 2009 Burlington Northern decision, that parties like 3M, who sold a "useful product" that its customers used and ultimately discharged as a hazardous waste, are not liable under federal law (i.e., CERCLA) unless the seller intended that its product would be disposed into the environment.

NJDEP's new theory was put to the test in two cases in 2021, and, in each case, the court found that the plaintiffs had stated a Spill Act claim against 3M merely for manufacturing and selling PFAS. In Giordano v. Solvay Specialty Polymers USA, LLC, 522 F. Supp. 3d 26 (D.N.J. 2021), the plaintiffs...