Rights and Liabilities When Contaminated Property Is Taken in Condemnation

Condemnation proceedings frequently involve properties affected by environmental contamination in various stages of remediation. At one end of the spectrum are properties that have yet to undergo even rudimentary investigation, while at the other are properties that have been fully remediated pursuant to applicable regulations. An article I recently co-authored (See New Jersey Law Journal, Feb. 11, 2019) surveyed the state of the law in that regard under the new regulatory regime pursuant to which oversight has been transferred from the New Jersey Department of Environmental Protection (NJDEP) to licensed site remediation professionals (LSRPs) retained by private sector entities. This article is more narrow in scope and focuses on the specifics of a condemnor’s liability under both New Jersey’s Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq. (Spill Act), and the more recently enacted Site Remediation Reform Act, N.J.S.A. 58:10C-1 et seq. (SRRA). A thorough understanding of the rights and liabilities of parties to an eminent domain proceeding under those statutes is critical to both condemnors and condemnees.

Condemnor’s Spill Act Exemptions

The Spill Act provides an exemption to governmental entitles for properties acquired in condemnation. As of Jan. 2, 1998, N.J.S.A. 58:10-23.11g(d)(4) eliminates the exemption for any governmental entity that has caused or contributed to the discharge of a hazardous substance, or that acquires property then being remediated in a timely manner. That the exemption excludes situations where the condemnor has caused or contributed to a discharge is hardly surprising. The exclusion for properties “being remediated in a timely manner” is significant, however. Although the legislative history for the provision does not explicitly address the rationale for this limitation, the logic behind it appears to be that a property being timely remediated cannot be realistically utilized until the remediation is completed anyway, after which a governmental entity in legitimate need of it could invoke its power of eminent domain, take the property, and preserve its statutory immunity. Pursuing condemnation before that point in time would essentially arrest the process and seize control of the remediation from the landowner. In that instance, it seems fair that if the governmental entity is going to interject itself into the process, it should bear the same consequences as the remediating landowner.