Sovereign Immunity Defeats Contribution Claims Against the State for Pre-Spill Act Discharges

NL Industries, Inc. v. State, 228 N.J. 280 (2017).  In 1976, the Legislature passed the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 to -23.24 (“the Spill Act”).  The Spill Act became effective in 1977.

Years earlier, in the early 1970’s, Sea-Land Corporation built a seawall in Laurence Harbor, NJ that was designed to protect the area from erosion.  That seawall was built, in part, with slag, an industrial byproduct, which was allegedly supplied by plaintiff NL Industries, Inc. (“NL”).  In 2014, after receiving a report from the New Jersey Department of Environmental Protection that there was contamination of the water along the seawall, the federal Environmental Protection Agency demanded that NL remediate the area.  The State of New Jersey had previously acknowledged ownership of some of the land on which the seawall was built, and the State was, of course, also an environmental regulator.  For those two reasons, NL therefore sought contribution from the State in connection with the remediation.

The State moved to dismiss, asserting (among other things) sovereign immunity.  The Law Division denied that motion.  The Appellate Division granted the State’s motion for leave to appeal and affirmed the decision below substantially for the reasons given by the Law Division.  On further review by the Supreme Court, that Court today reversed by a 6-1 vote.  Justice LaVecchia wrote the majority opinion.  Justice Albin was the dissenter.

The Spill Act, as originally enacted, included the State in the definition of “person[s]” who could be held responsible for discharges of pollutants.  Effectively, the Spill Act abrogated sovereign immunity for spills after its effective date.  But the Spill Act did not address, either originally or as amended, whether the State could be liable for spills that predated the Spill Act.

After exhaustively examining the history of the Spill Act and its multiple post-1977 amendments, Justice LaVecchia found no indication of intent to retroactively deprive the State of sovereign immunity for pre-1977 spills.  “[A] legislative waiver of sovereign immunity must be expressed clearly and unambiguously, Allen v. Fauver, 167 N.J. 69, 77-78 (2001), and a retroactive waiver of sovereign immunity requires the clearest of expression.” There was no evidence of such an expression here.  Thus, for example, the fact that the Spill Act as later amended made private parties liable for pre-Spill Act incidents did not extend to the State.

Nor did State v. Ventron Corp., 94 N.J. 473 (1983), on which the Law Division had relied, support the retroactive abrogation of sovereign immunity.  Justice LaVecchia discussed Ventron in detail, and cited multiple Appellate Division decisions that had declined to read Ventron as broadly having endorsed retroactivity of the Spill Act.

Justice Albin found the majority’s decision to be “at odds with the statute’s plain language, the Legislature’s policy objectives, and [the Court’s] decision in Ventron.”  He saw the case very differently than did the majority.  But his was the only dissenting vote.