CERCLA-LIKE ALLOCATIONS FOR DAM REPAIRS

Posted on January 7, 2015 by John A. McKinney Jr

Much of my legal work deals with hazardous material remediations driven by CERCLA or state equivalents. The allocation of these costs among liable parties, in court or out, is generally conceded to be expensive and ultimately unsatisfying to most of them.  I never thought I would see it in another area of environmental law but now I have.

Dams are regulated in my state by the New Jersey Department of Environmental Protection.  It is a big job.  Most of our lakes and ponds are dammed streams or rivers.  At one point New Jersey had 196 dams where a failure might result in probable loss of life and/or extensive property damage.  50 of these need repairs at an estimated cost in excess of $33 million. There were also another 396 dams where failure might result in significant property damage. 317 are in need of repair to bring them up to state standards at a cost in excess of $126 million.  Who pays for the necessary repairs to these dams and how?

A case decided by our intermediate appellate court on January 2nd of this year answers this question in a most CERCLA-like way.  In New Jersey Department of Environmental Protection v. Alloway Township the Appellate Division interpreted provisions of the Safe Dam Act (N.J.S.A. 58:4-1 to 4-14).  This Act “casts a ‘broad net’ of liability … so that its remedial purpose … is served” by imposing “significant obligations” on the owner or person having control of a reservoir or dam.  At issue in this case was a privately owned lake created by an earthen dam that now has township road on top which is supported by a county bridge and culverts that are part of the dam.

The New Jersey Department of Environmental Protection (“NJDEP”) brought an action against the person owning the property below the lake and the dam, the township that maintained the road on the dam and the county that maintained portions of the dam.  The court held “there are four classes of people who are subject to the statute: (1) dam owners; (2) reservoir owners; (3) those who control the dam; and (4) those who control the reservoir. It follows that if a party fits into any one of those categories, the [NJDEP] may seek enforcement of the SDA against that person.”  All the parties fell into at least one of those classes.

The Appellate Division also blessed the allocation of liability made below.  There, the judge, sitting in the Chancery Division - General Equity Part, made an equitable allocation of the costs of compliance:  sixty-five percent to the County, twenty-five percent to the property owner, and ten percent to the Township.

What – equitable allocation in another environmental program?  Cheer up CERCLA lawyers.  Our skills may be useful in dam regulatory litigation.