Opinion ID: 3009785
Heading Depth: 2
Heading Rank: 3

Heading: Contamination of the Bridgeport Site

Text: At the time the Bridgeport facility was built, New Jersey prohibited the construction of industrial waste treatment systems 0 Some of the LMI's earlier policies insured against an accident, which was circularly defined as an accident or series of accidents arising out of one event or occurrence. On summary judgment, the district court reasoned that New Jersey law defines the term accident in the accident-based policies in substantially the same manner as the definition of an occurrence in the occurrence-based policies -- an event neither expected nor intended by the insured. See Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Sur. Co., 817 F. Supp. 1136, 1148 (D.N.J. 1993). Thus, the court held that Chemical Leaman would bear the same standard of proof on the accident policies as it would on the occurrence-based policies. This finding is not challenged on appeal. 9 without the approval of the New Jersey Department of Health (NJDOH), and this prohibition was especially applicable to treatment facilities discharging effluent into surface and underground waters. See N.J. Rev. Stat. § 58:10-5 (1937) (prohibiting pollution of freshwater without Department of Health permit) (repealed 1977); N.J. Rev. Stat. §§ 58:11-10, 11-12 (1937) (requiring Department of Health approval for any change in sewage or industrial waste treatment system; owner of such system must periodically furnish information required by the department) (repealed 1977); N.J. Rev. Stat. §§ 58:12-1, 12-2, 12-3 (1937) (prohibiting operation of a plant for the treatment of polluting substances from which the effluent is to flow into any waters of the states unless approved by Department of Health; waters of the state include . . . all springs, streams and bodies of surface or groundwater) (repealed 1977). Chemical Leaman never obtained the required permits or approvals from the State of New Jersey to construct or operate the waste water disposal facility at Bridgeport. However, despite Chemical Leaman's failure to get official approval, the State of New Jersey learned the Bridgeport site was in operation. In March 1961, the New Jersey Division of Fish, Game & Wildlife (FGW) received a complaint of a number of dead fish in a pond that was fed by swamp water flowing from the direction of the Bridgeport facility. The complaint suggested that Chemical Leaman's facility may be responsible. On September 12, 1961, Inspector Walter Robinson of the Pollution Unit of the FGW inspected the Bridgeport facility and noticed a discharge into 10 the swamp from the overflow pipe in the last pond. Robinson had observed this discharge on about half of his visits to the Bridgeport site, and had concluded in a report dated September 12, 1961 that these conditions are not satisfactory. Thereafter, Chemical Leaman was asked to stop the discharge. Chemical Leaman responded by agreeing to attempt to purchase property to use as a disposal area and to retain a consultant to correct this situation. In return, FGW informed Chemical Leaman that FGW expected all work to be completed and pollution stopped by September 1, 1962. Chemical Leaman's response was the construction of the second set of unlined earthen aeration lagoons and the final settling lagoon discussed earlier. Inspector Robinson revisited the Bridgeport site on July 31, 1962, to check on the status of the new treatment system. His progress report noted that while a new spray disposal system had been installed in an adjacent field, the area still has to be diked and a new separator has to be installed in the old settling ponds. Although his report noted that the work should be completed in six weeks, there is no indication that this work was ever completed. Robinson's Progress Report did note that effluent was seeping into the ground as intended and not into the swamp and that this was a good indication that the new treatment system was working properly. However, at trial, Robinson testified that he may have thought the pits were lined, since that's the way things were done. Moreover, Robinson's responsibility was limited to preventing discharges to adjacent waters that could affect the fish or wildlife in the State of New 11 Jersey. Thus, seepage into the ground, whether or not potentially harmful to the groundwater, or any aspect of the environment other than fish and wildlife, was not his concern.0 Robinson's initial optimism proved unfounded when, in November 1968, water pollution inspectors from the New Jersey Department of Health (NJDOH) again observed a discharge from the overflow pipe in the last lagoon. The NJDOH water pollution inspectors concluded that the waste emanating from the lagoon is highly pollutional and [that] immediate measures [sic] be taken to eliminate this discharge or to sufficiently treat the waste prior to discharge. The inspectors also concluded that the Bridgeport site was operating in violation of State statutes since it was discharging an effluent without appropriate Departmental approval. As a result, in February 1969 the NJDOH ordered Chemical Leaman to submit plans concerning the methods and operations of a system designed to properly treat the effluent of their tank truck washing facility. In May 1969, Chemical Leaman submitted a plan for a new rinse water treatment system designed by its own engineering department. However, State regulators rejected this plan as they found the amount of remaining chemical residue in the treated rinsewater that would be discharged to a nearby stream to be unacceptable. 0 Ironically, while assessing Chemical Leaman's proposed solution for its pollution problem, Robinson observed one trailer being drained directly onto the parking lot. While such conduct was apparently a violation of company policy and would subject the individual to disciplinary action, this was not the only occasion on which he observed this prohibited conduct. 12 In February 1970, the NJDOH sampled the waste water in the lagoons and found the discharge to be objectionable. Thereafter, State officials again met with Chemical Leaman in an unsuccessful attempt to resolve the polluting discharges at the Bridgeport site. Chemical Leaman eventually entered into a consent judgment with the New Jersey Department of Environmental Protection (NJDEP) on January 28, 1974, which mandated construction of an approved facility by April 1974. Subsequently, in 1975, Chemical Leaman fully alleviated its waste water disposal problems when Du Pont agreed to take and treat the waste water. From November 1968, when water pollution inspectors from the NJDOH observed the discharge from the overflow pipe, until the summer of 1975, when the contract with Du Pont was entered into, some 40 to 50 million gallons of contaminated waste water was processed using the same treatment system as modified in 1962. Throughout the time the Bridgeport site was in operation Chemical Leaman discharged approximately 100 million gallons of contaminated waste water into the unlined ponds and lagoons, the bottoms of which were only two and a half feet above the groundwater. In late 1980, a routine NJDEP survey revealed the existence of contaminated groundwater at and around the Bridgeport site. A subsequent investigation disclosed that groundwater beneath the terminal was contaminated and that Chemical Leaman's unlined ponds and lagoons were the primary source of contamination. Thereafter, Chemical Leaman entered into an Administrative 13 Consent Order with the NJDEP to study the scope of the groundwater contamination at Bridgeport, and in 1984, the United States Environmental Protection Agency (EPA) placed the Bridgeport Site on the Superfund National Priorities List. 42 U.S.C. §§ 9605, 9607.0 As an owner and operator of the site, Chemical Leaman is strictly liable under CERCLA for the cost of the environmental cleanup. Id. In July 1985 Chemical Leaman entered into a consent decree with the EPA based upon a finding that four neighboring wells were contaminated, and that three more were threatened. In that decree Chemical Leaman acknowledged liability and agreed to undertake a Remedial Investigation and Feasibility Study (RI/FS) of environmental contamination at the site. It is this CERCLA liability for which Chemical Leaman seeks coverage under the policies purchased from the insurers.