US SUPREME COURT DECISIONS

The New Jersey Spill Compensation and Control Act (Spill Act), enacted in 1977 to respond to the problem of hazardous substance release, imposes an excise tax upon major petroleum and chemical facilities within the State to finance the prevention and cleanup of oil spills and leaks of hazardous chemicals from disposal sites. The tax revenue goes into a permanent fund (Spill Fund), which may spend money not only to clean up releases of hazardous substances, but also to compensate third parties for certain economic losses sustained as a result of such releases, and to pay administrative and research costs. The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), enacted in response to similar concerns, imposes an excise tax on petroleum and other specified chemicals and establishes a trust fund (Superfund) that may be used to clean up hazardous substance releases and for certain other purposes. CERCLA does not cover oil spills; nor is Superfund money available to compensate private parties for economic harms that result from hazardous substance releases. Superfund money may be used to reimburse private parties only for their cleanup activities that are expressly authorized by the Federal Government; to finance Federal or State Government expenses for short-term cleanup or for measures to achieve a permanent remedy to a particular hazardous waste problem; and to compensate those governments for damages to their natural resources. Appellant corporations, having paid the Spill Act tax, brought suit in the New Jersey Tax Court against appellees (the State and certain of its officials), seeking a tax refund and a declaratory judgment that the New Jersey tax was invalid in its entirety as being preempted under § 114(c) of CERCLA, which provides:

"Except as provided in this chapter, no person may be required to contribute to any fund, the purpose of which is to pay compensation for claims for any costs of response or damages or claims which may be compensated under this subchapter."

Section 114(c) also contains a saving provision stating that nothing in § 114(c) shall be interpreted to prevent a State from using general revenues for such a fund or from imposing a special tax to purchase or locate equipment or otherwise prepare for a response to hazardous substance releases. The court entered summary judgment for appellees, and the Appellate Division chanrobles.com-red

Page 475 U. S. 356

of the New Jersey Superior Court affirmed. The New Jersey Supreme Court also affirmed, holding that the Spill Fund tax was not preempted by § 114(c) insofar as the Spill Fund

"is used to compensate hazardous waste cleanup costs and related claims that are either not covered or not actually paid under Superfund."

Held:

1. The words "costs of response or damages or claims" in § 114(c) are to be read as a unit, and the entire phrase is modified by the phrase "which may be compensated under this subchapter," thus preempting any special state tax fund used to reimburse either a State or a third party for cleanup expenses. An interpretation of those terms so as to include only a private party's cleanup expenses, and so as to permit state fund expenditures for all state government cleanup efforts is not supported by CERCLA's history or the wording of other provisions of CERCLA, particularly the saving provision of § 114(c) which, in authorizing special state taxes to pay for the State's preparations for responding to hazardous substance releases, would be redundant if the preemption provision did not cover direct governmental expenditures at all. Pp. 475 U. S. 363-370.

2. Section 114(c)'s phrase "which may be compensated under this subchapter" is to be interpreted as preempting any state fund that is intended, in whole or in part, to pay for the same types of expenses that may be paid by Superfund, and not as covering only expenses that are actually paid by Superfund. Pp. 475 U. S. 370-371.

3. Neither the structure nor the legislative history of CERCLA supports appellees' contention that, although § 114(c) is not restricted to cases in which Superfund actually disburses money, it applies only when Superfund pays a claim or would have paid the claim had it not already been paid by a state fund. Remedying the Nation's toxic waste problems as effectively as possible was not the sole policy choice reflected in CERCLA. Congress' decision to enact a preemption provision resulted in part from its concern about the potentially adverse effects of overtaxation on the competitiveness of the American petrochemical industry. That consideration cautions against concluding that Congress would not have wanted to hinder state attempts to clean up hazardous substances in any way. Nor is there sufficient support in § 114(c)'s language or history to accept appellees' contention that, in view of the limited availability of Superfund money, only projects that have been actually approved, or are almost certain to be approved, can be termed "eligible" for Superfund financing, and then only to the extent of the approved funding. Pp. 475 U. S. 371-374.

4. The National Contingency Plan -- which CERCLA requires to be revised annually to list sites most in need of federal efforts -- provides chanrobles.com-red

Page 475 U. S. 357

the appropriate measure of whether a given expenditure constitutes "costs of response or damages or claims which may be compensated" by Superfund. Since CERCLA also provides that a State must agree to pay at least 10% of the cost of any remedial action for a hazardous site within the State, such state share is not eligible for Superfund money, and thus is not a cost that "may be compensated" for purposes of § 114(c). Under the above-stated principles, use of the New Jersey Spill Fund to compensate third parties for damage resulting from hazardous substance discharges, to pay personnel and equipment costs, to administer the fund, and to conduct research is beyond the scope of CERCLA, and therefore not preempted by § 114(c). However, use of the Spill Fund to finance state governmental cleanup (except the 10% state share of remedial costs) and to reimburse third parties for cleanup costs is preempted, so long as such efforts occur at sites that are eligible for Superfund financing according to the terms of the National Contingency Plan. Pp. 475 U. S. 374-376.

97 N.J. 526, 481 A.2d 271, affirmed in part, reversed in part, and remanded.

MARSHALL, J., delivered the opinion of the Court, in which BURGER, C.J.,and BRENNAN, WHITE, BLACKMUN, REHNQUIST, and O'CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion, post, p. 475 U. S. 377. POWELL, J., took no part in the consideration or decision of the case. chanrobles.com-red

Page 475 U. S. 358