On April 7, 2020, the Appellate Division of the New Jersey Superior Court rendered its decision in New Jersey Department of Environmental Protection v. Hess, A-2893-18T2 (N.J. Super. App. Div. Apr. 7, 2020), one of the lawsuits in which the State of New Jersey (the “State”) is seeking to recover natural resource damages (“NRDs”). Earlier this year we flagged the Appellate Court’s opinion as one to watch in 2020, particularly with respect to how the Appellate Court would rule on the State’s ability to assert a claim for trespass over land it does not own—an issue that has divided sister trial courts. See New Jersey Department of Environmental Protection v. Deull Fuel, No. ATL-L-1839-18 (N.J. Super. Ct. Law Div. Aug. 8, 2019) (denying motion to dismiss common law trespass claim because Public Trust Doctrine supersedes exclusivity element of trespass); New Jersey Department of Environmental Protection v. Hess, MID-L4579-18 (N.J. Super. Ct. Law Div. Dec. 21, 2018) (granting motion to dismiss common law trespass claim because State lacked exclusive possession over the land).  The Appellate Court’s unreported opinion provides clarity that despite the State’s authority under the public trust doctrine, it cannot assert a claim for trespass in the absence of exclusive possession.

Hess Corporation (“Hess”) operated a refinery in Port Reading and subsequently sold the property to Buckeye Partners L.P. (“Buckeye”) in 2013. The facility was and continues to be used to store and process crude oil and other refined petroleum products. The State initiated a lawsuit against Hess and Buckeye in August 2018, one of the first lawsuits brought by the State in over ten years to seek recovery of NRDs. In the State’s complaint it alleged discharges of hazardous substances from the refineries during Hess’s ownership of the property. Moreover, the State alleged that the hazardous substances impacted groundwater, surface water, sediment, wetlands, and biota. The State alleged claims under the New Jersey Spill Compensation and Control Act (“Spill Act”) and Water Pollution Control Act (“WPCA”), as well as the common law for public nuisance, trespass, and strict liability.

In October 2018, Hess moved to dismiss the State’s trespass claim and public nuisance claim to the extent that it sought relief beyond abatement. The following month Buckeye joined Hess’s motion and also moved to dismiss the State’s trespass, public nuisance, and strict liability claims. The trial court heard oral arguments on December 21, 2018, and that same day the court granted Hess and Buckeye’s motions and dismissed with prejudice the State’s trespass and common law strict liability claims as to both Hess and Buckeye, and limited the remedy for the State’s public nuisance claim to injunctive relief. The State sought interlocutory appeal of the trial court’s decision.

On April 7, 2020, the Appellate Court rendered its opinion and decision reversing the trial court’s dismissal of the State’s claim for strict liability against Hess, affirming the dismissal of the State’s trespass claim, and remanding so that the trial court’s order could be clarified to state that dismissal of the State’s claim for monetary relief in the public nuisance claim does not encompass costs of abatement. New Jersey Department of Environmental Protection v. Hess, A-2893-18T2 (N.J. Super. App. Div. Apr. 7, 2020).

First, the court rejected the trial court’s dismissal of the State’s strict liability claim, which was premised on the trial court’s determination that the storage and processing of crude oil and refined petroleum products are not abnormally dangerous activities and, even if they were, the State’s strict liability claims were subsumed within the Spill Act. The Appellate Court rejected the trial court’s determination on the strict liability claim, ruling that the Spill Act remedies are provided in addition to those existing under common law. The court moved on to then address whether the complaint sufficiently alleged a cause of action for strict liability based on Hess and Buckeye maintaining an abnormally dangerous condition. The Appellate Court, disagreeing with the trial court, held that Hess’s “storage and processing of petroleum . . . was an abnormally dangerous condition for which strict liability may be imposed.” Id. at 11. With respect to Buckeye, however, the Appellate Court agreed with the trial court that the complaint failed to set forth sufficient facts to support a claim for strict liability. Applying the test in New Jersey Department of Environmental Protection v. Ventron Corp., 94 N.J. 473, 488 (1983), the court held that “[t]he extent of the operations, its proximity to sensitive waterways and environmental areas, and the danger of the pollutants allegedly used in Hess’s operations that were discharged, albeit unintentionally,” satisfied the Ventron test and, therefore, constituted an abnormally dangerous activity for purposes of maintaining a claim of common law strict liability against Hess. Hess, A-2893-18T2, at 14. The court, however, found that the State’s complaint does not contain any allegations as to any activities conducted by Buckeye or anyone else during its ownership that has to do with any alleged discharge or contamination. Accordingly, the court held that the common law strict liability claim against Buckeye was properly dismissed.

Next, the Appellate Court addressed the trial court’s dismissal of the State’s trespass claim on the basis that the State lacked exclusive possession over the subject property. The court rejected the State’s argument that under the public trust doctrine it has ownership rights of water resources. The Appellate Court explained that under New Jersey law, “[a] trespass requires that the invasion be to land that is in the exclusive possession of the plaintiff.” Id. at 16 (citing Ventron, 94 N.J. at 488-89). The court went on to clarify that land held in the public trust by the State on behalf of the people of that State cannot be in the State’s exclusive possession “as the interest created by the doctrine is intended to ensure that others have use of the same land. It does not grant to the State the exclusive possession of property.” Id. at 17. Thus, the Court held that the trial court correctly dismissed the State’s trespass claim.

Lastly, the court addressed the dismissal of the State’s public nuisance claim to the extent the State seeks damages in the form of monetary relief other than abatement. The Appellate Court affirmed the trial court’s dismissal of the public nuisance claim, but restored the State’s ability to otherwise seek monetary relief associated with judgments ordering abatement of a public nuisance, if the State succeeds on its claim.

The unreported Appellate decision is likely to impact the State’s approach in future NRD actions. Moreover, the opinion may also prompt additional appeals and motion practice in the other pending NRD lawsuits. Based on the numerous pending NRD lawsuits and the State’s promise to continue to initiate additional NRD recovery actions, it is likely that the Appellate Court’s decision is the first of many appeals that will shape the State’s ability to assert certain claims in these NRD lawsuits.

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