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Proposed changes to Spill Act raise stink Don't exempt public entities, opponents say

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The lower Passaic River (U.S. EPA)
The lower Passaic River (U.S. EPA)

A years-old legal fight over pollution in the lower Passaic River could lead to significant changes in the way the state enforces its 30-year-old Spill Compensation and Control Act.

At issue is whether publicly owned sewer systems, wastewater treatment plants and municipalities are liable for cleanup costs associated with pollution collected or expelled from their systems.

Over the past few months, two bills aimed at limiting public entities' Spill Act liability were introduced in the state Legislature. The first, sponsored by Assembly Environment and Solid Waste Committee Chair L. Grace Spencer (D-Newark), cleared Spencer's committee last week. Spencer's bill would amend the Spill Act's definition of hazardous waste so as not to include domestic, commercial or industrial sewage, sludge or wastewater collected or expelled from sewer systems and public wastewater treatment plants.

Another bill, proposed in the state Senate by Sen. Nicholas Scutari (D-Linden) would simply exempt county and municipal agencies from liability for Spill Act cleanup costs.

Christopher Hartwyk, an attorney pushing for passage of Spencer's bill, said the original intent of the Spill Act was always to exempt publicly owned treatment works, or POTWs, from paying cleanup costs. But he said the Department of Environmental Protection has misinterpreted the bill.

"The problem is the DEP in a previous case narrowly construed the exemption and this legislation is an attempt to correct that," he said.

The matter has come to the forefront because of a legal case, several years old, involving pollution of the Passaic River and Newark Bay in the 1950s and 1960s. In 2005, the DEP brought suit against Occidental Corp., Tierra Solutions and Maxus Energy seeking to hold the companies liable for polluting the waterways. The state succeeded, but in 2009 Maxus and Tierra added about 300 "third-party defendants" to the case, claiming they, too, were liable to pay part of the cleanup costs.

Hal Bozarth, executive director of the New Jersey Chemistry Council, said state law gives companies deemed chiefly responsible for pollution the ability to sue other liable parties for their share of the cleanup costs. Those other polluters are known as "third-party defendants." If found liable, third-party defendants are generally assigned costs proportional to their share of responsibility for the pollution.

"It's good from the state's standpoint because the state doesn't have to spend all that time and money finding third-party defendants," Bozarth said, noting that the federal Environmental Protection Agency uses a similar liability scheme.

Hartwyk represents the Joint Meeting of Essex and Union Counties and the Jersey City Municipal Utilities Authority, both third-party defendants in the Occidental case. He said his clients deny any wrongdoing and deny they broke any law in effect at the time of the pollution. Even if they had, he said, holding public entities financially liable for cleanup costs is a bad idea.

"It's just bad public policy to allow private-party polluters to push their liability off on taxpayers and ratepayers," Hartwyk said. "…This law was never intended for this purpose."

The Joint Meeting has launched a website to push for passage of Spencer's bill, located at www.njspillactbill.org.

Bozarth, who opposes the bills, said it's misleading to insinuate public entities would have to raise taxes or rates due to cleanup judgments.

"That's why the towns and the POTWs should have had insurance," he said. "And my guess is most of them do, and that insurance will cover them for any liability they have."

It's unclear whether either of the bills will make it to Gov. Chris Christie's desk.

Ed Oatman, Scutari's chief of staff, said the senator introduced his exemption bill after hearing from a couple of municipalities that were named third parties in the case. He said they are open to meet with parties involved to hammer out a compromise.

Larry Hajna, a spokesman for the DEP, said the agency is reviewing both pieces of legislation but has not taken a position.

Sen. Bob Smith (D-Piscataway), who chairs the Senate Environment and Energy Committee, said he's gathering input from interested parties.

Meanwhile, the bills have created unusual alliances between business groups and environmentalists.

Jeff Tittel, executive director of the Sierra Club of New Jersey, said he has no sympathy for the polluters and considers their strategy of suing third-party defendants to be "harassment." Still, he said exempting anyone from cleanup liability is a bad idea.

"Without the threat of punishment or the threat of cleanup costs, I think it leads to more mismanagement and more malfeasance and no accountability," said Tittel.

Sara Bluhm, vice president of energy and environmental affairs at the New Jersey Business and Industry Association, said the bill could hurt businesses by saddling them with the costs of public entities' violations.

"If we're saying the rules are the rules, then they need to apply to everyone," she said.

Hartwyk said changing the law wouldn't open the door to more pollution because POTWs would still fall under regulation.

"The manner in which you incentivize POTWs and municipalities to address the issue of sewerage discharges is through the regulatory process," he said.

He said the lawsuits force entities like his clients to spend millions of dollars paying legal bills and judgments instead of spending the money to upgrade their facilities.

But Tittel worries Hartwyk's solution could cause bigger problems of its own.

"I just think sometimes in trying to correct what is wrong we can create more harm," he said. "I think that's what you see here."

E-mail to: jaredk@njbiz.com
On Twitter: @jaredkaltwasser

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