Exxon Corp. v. Hunt

No. 71-1458-M (D.N.J. July 27, 1981)

The district court dismisses on jurisdictional grounds plaintiffs' request for a determination that § 114(c) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA) prohibits the State of New Jersey from collecting revenues pursuant to its Spill Compensation and Control Act. Although § 113(b) of CERCLA provides for exclusive federal court jurisdiction over suits arising under it, 28 U.S.C. § 1341 precludes district courts from enjoining the assessment or collection of state taxes where a plain, speedy, and efficient remedy may be had in the courts of the state. The court deems the latter more specific statute to control over the more general CERCLA provision and finds that the New Jersey Tax Court does provide a plain, speedy, nd efficient remedy.

[The arguments in this case are summarized at ELR PEND. LIT. 65695 and 65709 — Ed.]

Counsel for Plaintiffs
John J. Carlin Jr.
Farrell, Curtis, Carlin & Davidson
43 Maple Ave., Morristown NJ 07960
(201) 267-8130

Counsel for Defendants
Eugene J. Sullivan, Deputy Attorney General; James R. Zazzali, Attorney General
36 W. State St., Trenton NJ 08625
(609) 292-4353

[11 ELR 20886]

Meanor, J.:

[11 ELR 20887]

Transcript of Proceedings

I suppose this is a case on which I ought to write an opinion. However, the jurisdictional issue that is raised here is of considerable significance.

The case cries out for expedition so that New Jersey will know what taxes it can collect and to what end it will dedicate them. Exxon certainly has a right to know whether it's being asked to pay to New Jersey a tax that is precluded by federal law.

It is my suggestion, since I'm going to dismiss the matter for lack of subject matter jurisdiction pursuant to 28 U.S.C. § 1341 that Exxon pursue its relief on both avenues; that it take prompt appeal to the Court of Appeals from this decision, because before I get into this very complicated case I want to make sure that the jurisdictional base is solid.

I would suggest that Exxon request the Court of Appeals to expedite this matter. It will permit solely a question of law on a limited record.

I would also suggest because I think the need for prompt resolution of this controversy is paramount, that while the appeal from the decision I'm entering today is pending that Exxon attempt to cooperate with the State of New Jersey and try to place this matter before the New Jersey Tax Court.

If the case comes back to me from the Court of Appeals for decision it will be decided. If I am affirmed it will be a clear-cut statement that the case didn't belong here in the first place and that the only remedy that Exxon has is to litigate the issue projected by Superfund preemption before the New Jersey courts.

One reason I do this is the matter of judicial economy. I don't want to go through several months of litigation in a voluminous case only to find out there was no jurisdiction in the first place. That would be a disservice to the judicial system and a disservice to the parties.

By this statement, however, I do not want to be understood as having considerable doubt about the accuracy of this result. I think it is an accurate one.If I thought the other way around I would probably deny the motion and enter a 1292(b) certification so we could get appellate clarification before the complicated case gets under full meritorious sail.

The Superfund is a euphemism for the Comprehensive Environmental Response Compensation and Liability Act enacted in December 1980. It authorizes and provides for a national program for compensation of losses from hazardous waste discharges.

Section 114(c) of the Act states that no one can pay taxes for funds which duplicate the Superfund or its purpose.

New Jersey has such a fund. It is collecting taxes for it from producers of oil and chemicals, and Exxon, as the lead plaintiff in this case, brings the suit to have the state tax declared unconstitutional as preempted by the Superfund. It also seeks a refund of the taxes paid with interest.

28 U.S.C. § 1341 states: "The District Court shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under state law where a plain, speedy, and efficient remedy may be had in the courts of such a state."

I think if this statute is applicable it certainly does preclude litigation in this court.

In my judgment the New Jersey Tax Court setup does provide a plain, speedy, and efficient remedy. It provides a judicial or quasi judicial remedy at a trial level with a right of appeal to the Superior Court, Appellate Division, and right of discretionary review in the State Supreme Court. But since this case raises a constitutional issue I rather imagine there would be a right of appeal to the State Supreme Court in any event.

On its face, § 1341 would preclude this suit. I think it is clear that the declaratory judgment action as well as claims for injunctive relief against the assessment and collection of taxes and for refunds are precluded as well.

Section 113(b) under he Superfund Act says that: "The United States District Courts shall have exclusive original jurisdiction over all controversies arising under this Act. . . ."

I have to say that on the face of it, the complaint filed by Exxon here does arise under Superfund. It lays out Superfund, Lays out the New Jersey tax and says Superfund, by its terms, precludes the assessment and collection of the New Jersey tax.

The question that is posed is whether the general language of the Superfund Act conferring exclusive original jurisdiction for cases arising thereunder, is a modification pro tanto of 28 U.S.C. § 1341.

Apparently this subject was not broached in the legislative history. I do confess I have not had a chance to review the legislative history, but both counsel tell me the effect of the general jurisdictional grant upon § 1341 was not mentioned in the legislative history and I will, of course, accept their word for it.

I suppose there's a rather simple analysis one could go through. An axiom of statutory construction where you have a general statute and a particular statute, is that the particular statute or specific statute controls.

Applying that maxim here it is obvious that 1341 would control and not the general jurisdictional grant of 113(b).

The problem that has been voiced by Exxon is that the language of 113(b) might be said to preclude state court jurisdiction over a claim arising under Super fund, claiming the Superfund Act preempts the State Taxing Law.

I don't think that is so. First, as we pointed out in argument, if the state really wants to litigate this before the state taxing courts I suspect that a case could be structured whereby the problem would not arise.

Exxon could refuse to pay the tax, be used for a judgment for the amount of taxes not paid and could defend upon the ground that the tax was preempted by federal law.

It would be clear under those circumstances to me that the case would not be one arising under federal law.

It seems to me silly to say the state courts can do through the back door what they can't do through the front door.

Furthermore, putting together 1341 and 113(b), it should be rather obvious that state courts would not be precluded from entertaining actions arising under Superfund where the federal courts could not entertain them.

If I am right in my construction of 1341 it would seem to me that the state courts would be able to entertain a claim arising under Superfund to the extent of contention that Superfun preempts state taxing statutes.

The only purpose of this exclusive original jurisdictional grant to the federal courts was to see that the federal courts and federal courts alone administer the statute. Probably there was a desire to avoid conflict in the administration and construction of the statute among the federal courts, which ultimately can speak as the final authority, and the state courts.

There would be no purpose in preventing the state courts from entertaining litigation under Superfund, that would not be within the ambit of the federal court jurisdiction.

Furthermore, with respect to the state court, after all the claim that Superfund preempts the state taxing statute is a constitutional claim. I, for the life of me, do not know how Congress would enact jurisdictional statutes governing U.S. District Courts that would have the effect of precluding people within the state court system from raising meritorious federal constitutional issues. I know of no analogy to that, I know of no authority for the statement, but it seems quite sensible to me to say that Congress could not prevent one from asserting his federal constitutional rights as against state action within the state court system. I fact, such a doctrine would cause me extensive problems.

I am not, therefore, overly concerned with the proposition Exxon may find itself in some kind of a limbo being unable to litigate Superfund preemption in this court because of 1341, and by the same token being unable to litigate Superfund preemption in the state court because of 113(b) of the Superfund Act. I don't think the judicial system is going to tolerate putting Exxon in such an impossible predicament. So I will, therefore, dismiss the complaint in this case as precluded from adjudication here under 28 U.S.C. § 1341.

I repeat my admonition that I think Exxon should litigate this issue before the Court of Appeals and also take steps to go before the New Jersey Tax Court. If the case comes back I'll decide it and I will appreciate expedition by the Court of Appeals because I think this is a significant litigation and the jurisdictional problems ought to be cleared from the underbrush before we get into this case more deeply than we have.