Environmental & Energy Law Monitor : Environmental & Energy Lawyer & Attorney : Cole Schotz Meisel Forman & Leonard Law Firm : NJ, Mid-Atlantic Brownfield & Climate Change Law

On November 4, 2009, the New Jersey Department of Environmental Protection (“DEP”) issued regulations for the new site remediation requirements under the Site Remediation Reform Act. One of the most significant requirements of the new law is that all new cleanup cases are required to be competed through the use of a Licensed Site Remediation Professional (“LSRP”). The LSRP essentially acts in the place of the DEP to ensure that a cleanup meets all applicable remediation requirements. Once the LSRP is satisfied that the cleanup is completed, the LSRP will issue a Response Action Outcome (“RAO”) letter for the cleanup. The RAO is the equivalent of a DEP-issued No Further Action letter – it is the document which formally closes a cleanup case.

Working with its LSRP John Brennan (from Brennan Environmental, Inc.), Cole Schotz was able to obtain one of the first RAOs issued under the new cleanup law. As an ISRA-subject tenant, our Client was obligated to complete the ISRA investigation and cleanup requirements before purchasing the property from its landlord. To allow closing to occur before the ISRA case was completed, Cole Schotz facilitated the filing of a Remediation Certification, which permitted the closing to proceed before the ISRA case was completed. Three weeks later, after working closely with Cole Schotz, Brennan issued his RAO and thereby closed our Client’s ISRA case.

Because the LSRP requirements are new, it is critical that your professionals (attorneys and consultants) work closely together to make sure the cleanup progresses smoothly under the new rules.
 

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In the past couple of years, the New Jersey Department of Environmental Protection (“NJDEP”) filed more than 100 lawsuits against companies seeking compensation for restoration of damages to natural resources caused by the companies’ discharge of chemicals to the environment. NJDEP also sought compensation for the public’s loss of use of those natural resources.

These actions were based on state statute, common law claims such as claims for nuisance and trespass, as well as the public trust doctrine. Under the public trust doctrine, the State, as trustee of the state’s natural resources, is required to manage the State’s natural resources to the benefit of its citizens and to ensure that they are not injured or impaired. Natural resources include all land, air, water, flora and fauna and the activities and services provided by these resources. When companies discharge hazardous substances to the environment causing damage to these natural resources, NJDEP attempts to recover Natural Resource Damages, commonly known as “NRDs,” in addition to requiring the company to clean up the contamination.

While the lawsuits initiated by NJDEP work their way through the courts, recent decisions have clarified several issues that have been the cornerstone of NJDEP’s NRD policy. Specifically, the courts ruled that:

1. NJDEP can seek compensation for the restoration of NRDs under New Jersey’s Spill Compensation and Control Act, known as the Spill Act, and that parties causing NRDs are strictly liable. The significance of this decision is that a company can be required to compensate NJDEP for NRDs even though the discharge of chemicals that caused the damage to the natural resources was not intentionally caused or in violation of any law at the time the discharge occurred.
2. The Spill Act allows NJDEP to seek compensation for the loss of use of a natural resource such as the public’s inability to use a stream for recreational purposes because it is contaminated. Under this ruling, NJDEP can seek damages for the time period during which the public was deprived of the ability to use such natural resources. The impact of this decision increases significantly NJDEP’s demand to liable parties for damages and requires that the NRDs be restored as quickly as possible to minimize the damages arising from loss of use of the natural resource.
3. NJDEP’s formula to calculate a monetary value for the damage done to natural resources was unreliable. The Court held that NJDEP did not follow the required rule making process to establish the reliability of the formula and failed to produce sufficient scientific support to sustain the damages it was seeking. The ruling will make it more difficult for NJDEP to prove its case in future lawsuits involving NRDs.
4. Liability under the Spill Act for NRDs extends to discharge of hazardous substances that occurred prior to the enactment of the Spill Act. The impact is that discharges that occurred years ago can now be subject to a cost recovery action by NJDEP.
5. The Public Trust Doctrine, the basis upon which NJDEP seeks to recover NRDs, has been expansively interpreted to include private land such as land upland from the tidal zone on coastal property.

It is expected that a number of other issues impacting NJDEP’s NRD program will be resolved in the upcoming years. If a company is sued for NRDs, it should review its insurance coverage and acquisition documents. These documents may allow the company to seek reimbursement from other responsible parties or its insurer for any damages paid to the NJDEP for NRDs. Similarly, if a company is considering purchasing a business or real property, it must also take into consideration during contract negotiations NRD issues. Only by being proactive will a company be best prepared to address potential NRD claims.

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The Administrative Requirements For Remediation Of Contaminated Sites (“ARRCS”) were promulgated on November 4, 2009. These interim rules were issued pursuant to the Site Remediation Reform Act (“SRRA”) that was passed on May 7, 2009, which changes the way investigation and cleanups are conducted in New Jersey. These interim regulations include significant modifications to the New Jersey Department of Environmental Protection (“NJDEP”) Oversight Rules (replaced by ARRCS), and the Technical Requirements for Site Remediation (“Tech Regs”) that immediately impact existing and new cases.

These newly minted requirements apply to parties who are conducting environmental cleanups, sellers, buyers, and environmental consultants performing investigations and cleanups. The objective of the new program is to ease the burden of the NJDEP staff and case backlog by creating a Licensed Site Remediation Professional (“LSRP”) program. The LSRPs are environmental consultants with specified education and experience certified by NJDEP to perform investigations and remediation at sites in New Jersey. The new program requires the LSRP to make the decisions concerning the scope of any investigation and remediation of a site, not the NJDEP. Further, any submissions concerning the remediation of a contaminated site must be signed and certified by both the person responsible for conducting the remediation and the LSRP. In lieu of the NJDEP issuing a typical No Further Action Letter (“NFA”), LSRPs will issue a Response Action Outcome (“RAO”) certifying that the investigation and cleanup of the site was completed in accordance with the Tech Regs. However, please note that the NJDEP has a three year period in which it can “audit” the LSRP’s work, if not more, depending on the circumstances.

Contrary to previous indications by NJDEP, Irene Kropp, NJDEP Assistant Commissioner for Site Remediation, recently indicated the NJDEP will approve the vast majority of existing cases if they elect to “opt-in” to the LSRP program. The new program is designed to streamline NJDEP’s review of environmental reports by taking the majority of the work out of its hands and into the hands of the LSRPs.

If a party conducting a cleanup has reported the contamination to the NJDEP prior to November 4, 2009 and have “continuously” conducted the remediation since that notification, they will be deemed to be an existing case. If so, they may wait until May 2012 to utilize an LSRP. However, if a person initiates remediation on or after November 4, 2009, they have no choice but to hire an LSRP to conduct a cleanup of a site without prior NJDEP approval.

Highlights of New LSRP Program:

• In addition to NJDEP oversight fees being charged, there are new remediation fees that will be assessed depending on the number of areas of concern identified at a site and the type of media impacted (soil v. groundwater).
• There are numerous guidance documents and forms being created by the NJDEP associated with implementation of ARRCS and the modified Tech Regs. Although the majority of these forms have yet to be finalized, NJDEP is actively uploading them to their website (www.nj.gov/dep/srp/srra/).
• NJDEP has established mandatory timeframes for the completion of key phases of site remediation.
• Restricted use cleanups will be governed by presumptive remedies outlined by NJDEP at residential properties, daycare facilities and schools.
• Remedial action permits will be required for all restricted use remedies utilized in site cleanups.
• Responsible parties will also be required to establish a remediation funding source for the majority of cases, which would not have otherwise been required to establish such a funding source.
   

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