NJ Governor Vetoes Legislation Aiming to Limit Liability of Oil Delivery Firms under 2015 Appellate Division Decision

September 6, 2018
Bruce S. Katcher
MGKF Newsflash

On August 27, 2018, Governor Murphy vetoed a bill (S2662) that would have limited the liability for cleanup costs and damages of any person that delivers heating oil to an unregulated heating oil tank to circumstances where it knew or had reason to know that the delivery would result in a discharge from the tank.  The bill would have superseded liability under the Spill Compensation and Control Act (Spill Act) and any other law or common law. The primary sponsors of the bill, which passed both houses of the legislature unanimously, included Senator Sweeney, president of the Senate (who has frequently sparred with the Governor since he took office in January), and Assemblyman Burzichelli, Deputy Speaker of the Assembly, who sponsored a corresponding bill in the Assembly.

The Governor’s veto message indicated that the bill was inconsistent with the broad standards of strict liability under the Spill Act which had existed for over forty years and would create a special rule for one category of otherwise responsible parties “potentially resulting in severe consequences to homeowners and small business owners”, who would presumably be left responsible for the entire cost of cleanup.  The Governor also complained that the bill, which had been introduced shortly before the legislature’s traditional budget break, had been passed without the benefit of hearings in the environmental committees in either the Senate or the Assembly.

The veto message noted that the bill was intended to respond to a 2015 unpublished Appellate Division decision in the case of Morristown Associates v. Grant Oil Co., (App Div. 2015).  In this decision, which was on remand of the case from the Supreme Court following its momentous determination that there was no statute of limitations under the Spill Act, the Appellate Division stated that “. . . any defendant who is shown to have delivered fuel oil into a leaking UST system, released a hazardous substance into the ground and could meet the statutory definition of a discharge.  In addition, if a defendant owned or operated a vehicle from which a discharge occurred, they could be a ‘person responsible for a discharge.’  N.J.A.C. 7:1E-1.6.” 

The court further explained that while the plaintiff must establish a nexus between each defendant and the contamination per the Dimant case, it did not need to show that the defendants had notice that the fill line was leaking. Following remand to the trial court, the case was settled in 2017.

Upon the heels of the veto, Senator Sweeney and Assemblyman Burzichelli released a statement on September 6, 2018 strongly rebuking the Governor for his veto and noting that the legislation was intended “to restore the understanding of the Spill Act that the courts had prior to” the 2105 decision in the Morristown Associates remand decision and to shield small businesses who deliver fuel oil from unfair exposure to major clean-up costs when they don’t know that a tank is leaking. 

The consequence of this back and forth seems to be that it may now be clearer than ever that without a legislative fix, a deliverer of fuel oil to an underground storage tank, whether the tank is regulated or unregulated, has liability for cleanup costs and damages under the Spill Act if that tank leaks the oil that was delivered, regardless of whether the deliverer knew or had reason to know of the leak.

For more information contact Bruce Katcher at 484-430-2320.