S.2345 Section 2 adds a new defense to Spill Act liability (N.J.S.A. 58:10-23.11g.d.(5)) for pre-September 14, 1993 purchasers of real property. The provision provides as follows: (5) A person… who owns real property acquired prior to September 14, 1993 on which there has been a discharge, shall not be liable for cleanup and removal costs or for any other damages to the State or to any other person for the discharged hazardous substance pursuant to subsection c. of this section or pursuant to civil common law, if that person can establish by a preponderance of the evidence that subparagraphs (a) through (d) apply:

(a) the person acquired the real property after the discharge…;

(b) (i) at the time the person acquired the real property, the person did not know and had no reason to know that any hazardous substance had been discharged…, or (ii) the person acquired the real property by devise or succession, except that any other funds or property received by that person from the deceased… who discharged a hazardous substance or was in any way responsible for a hazardous substance, shall be made available…;

(c) the person did not discharge the hazardous substance, is not in any way responsible for the hazardous substance, and is not a corporate successor to the discharger…;

(d) the person gave notice of the discharge to the department upon actual discovery of that discharge.

To establish that a person had no reason to know that any hazardous substance had been discharged for the purposes of this paragraph (5), the person must have undertaken, at the time of acquisition, all appropriate inquiry on the previous ownership and uses of the property based upon generally accepted good and customary standards. Nothing in this paragraph (5) shall be construed to alter liability of any person who acquired real property on or after September 14, 1993.

There has been some debate as to the liability of new purchasers of contaminated property prior to September 1993. Some argued that such persons generally were immune unless they were connected to the discharge; others argued that they were automatically liable, because there was no innocent purchaser defense and the strict liability statute and enabling regulations arguably treated innocent owners no differently than discharging owners. Impliedly, however, if a person does not meet the new defense, it will be liable. The last sentence supports the position that even if pre-September 1993 owners were immune from liability before this amendment, since the amendment can alter the liability of those acquiring before September 14, 1993, that immunity can disappear if they cannot meet the new standards.

Finally, if one does qualify for a defense, however, the defense should not be limited to claims of NJDEP. The new section expressly applies, at least as to Spill Act claims, but arguably beyond those (e.g. toxic tort or stigma damage claims), to claims of third parties. This concept is certain to generate controversy and litigation.

d. Miscellaneous