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

The ecological health of Barnegat Bay is in decline, mostly resulting from human activities.  Since Barnegat Bay is a key feature of the shore experience in central New Jersey, the impact to its aesthetic, economic and recreational values threatens the economic health of the region.  In December 2010, the New Jersey Legislature enacted three statutes designed to comprehensively address the situation. Gordon Duus, Chair of the Environmental Department of Cole Schotz, recently had an article on this subject published in the February 28, 2011 issue of the New Jersey Law Journal.  Click here to read the article.

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On January 5, 2011, Governor Christie signed into law a bill (Assembly Bill A-2501) which amends the Soil Erosion and Sediment Control Act, N.J.S.A. 4:24-39 et. seq. (the “Act”). The Act, designed to control and limit soil erosion, authorizes the State Soil Conservation Committee to establish standards for the control of soil erosion and sedimentation. One example of the soil management requirements resulting from the Act is the use of silt fences at construction sites.

According to Governor Christie’s press release announcing his signing into law Assembly Bill A-2501, the new amendment “updates statewide soil erosion and sediment control standards so that soils can properly absorb and control stormwater runoff. This will help address problems at many construction sites, where soils get compacted to such a degree that water simply runs off into our waterways, carrying pollutants and nutrients as they go.”

The following specific changes to the Act are made in the bill:

1. A developer’s plan for controlling soil erosion and sedimentation will now be required to include “soil restoration measures,” in accordance with the standards to be established by the Soil Conservation Committee. Under the old rules, soil erosion and sediment control plans only required measures to control soil erosion during the project. The new law requires a plan to restore the soil conditions at the site once the project is completed.
2. The new law defines “soil restoration measures” to include “those measures taken to ensure, to the maximum extent possible, cost-effective restoration of the optimal physical, chemical, and biological functions for specific soil types and the intended land use.” What is “cost-effective” and what those optimal functions are will likely be the source of some debate as the new requirements are implemented.
3. The definition of “disturbance” in the Act is amended to include the “compaction of soil which degrades soil so as to make it less conducive to vegetative stabilization.” The terms “vegetative stabilization” is not defined, leading to potential issues in the implementation of the new requirements.
4. The Soil Conservation Committee is tasked with modifying the existing soil erosion and sediment control standards to include standards for “soil restoration measures.”

Developers will need to keep up-to-date on these rule changes as they proceed with and plan their development projects to ensure compliance with the Act.

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In 2004, the New Jersey Highlands Water Protection and Planning Act (the “Act”) became law. The law created two distinct regions, the Preservation Area and the Planning Area. Development in the Preservation Area was severely restricted under the Act. To address the loss of development rights in the Preservation Area, the Act also authorized a Transfer of Development Rights (“TDR”) program to be administered by the New Jersey Highlands Council (the “Council”).

The TDR program is designed to allow property owners in the Preservation Area to sell their development rights [Highlands Development Credits (“HDCs”)] to developers in the Planning Area. Developers that buy HDCs will be able to use those purchased HDCs to undertake more intensive development than would otherwise be permitted. Planning Area municipalities can voluntarily elect to become “Receiving Zones,” which are areas where HDCs can be used for more intensive development. Because few Planning Area municipalities are opting to become Receiving Zones, there is an amendment to the Act currently pending before the state legislature which would expand the program and allow any municipality in the state to become a receiving Zone for HDCs

The Council further created a Highlands Development Credit Bank (the “Bank”), and has authorized the Bank to purchase HDCs to “jump start” the TDR program and alleviate financial hardships affecting property owners in the Preservation Area. The Bank has been funded with $10 million, and has started the process of purchasing HDCs. The Bank’s purchase of HDCs will be based on a priority ranking undertaken by the Bank. The First Priority will be to buy HDCs for properties where both (a) the owner is experiencing “extenuating financial circumstances” and their equity in the property is “substantial” in relation to their net worth and (b) the owner had all development approvals except certain Department of Environmental Protection approvals when the Act was passed. The Second Priority is to purchase HDCs for properties where the property owner satisfies only (a) above. The Third Priority is to purchase HDCs for properties where the property owner only satisfies (b) above.

At this time, the Bank is only purchasing HDCs for residential-zoned properties. The initial value of one HDC is $16,000. To implement this program, the Council has created an “HDC Estimator Tool” on its website (http://www.highlands.state.nj.us/), which will provide land owners with a range of expected HDCs for properties in the Preservation Area. Thus, if the Council has estimated that a property may be “worth” 12-14 HDCs, the Bank would buy those HDCs for between $192,000 and $224,000.

The first step in the process of redeeming HDCs is to submit an HDC Allocation Application with the Council. Based upon this application, the Council will (a) determine if the applicant meets the “extenuating financial circumstances” criteria and (b) make a formal determination of how many HDCs apply to the property. If the property owner accepts the Council’s HDC allocation, the next step is to submit an HDC Certificate Application to the Bank. These applications will be prioritized by the Bank and the Bank will issue offers to buy those credits. If an offer is accepted, the property owner will record a conservation restriction in the property’s title. This conservation restriction will prevent any future development of that property. At that point, the Bank will make its payment to the property owner.

As of January 7, 2010, the Council has received only eleven applications. For this first round of hardship HDC purchases, the Council is accepting HDC Applications until March 1, 2010 and the Bank is accepting HDC Certificate Applications until April 15, 2010. Therefore, if you are interested in obtaining payment for lost development rights in the Highlands Preservation Area, you should act quickly to explore this option.
 

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On February 17, 2009, President Obama signed into law the American Recovery and Reinvestment Act of 2009, also known as the Stimulus Bill. Among the numerous programs encompassed within the Stimulus Bill are significant proposed expenditures for environmental and energy projects. There are many opportunities for businesses to capitalize on the federal funding and tax incentives provided by the Stimulus Bill. But those businesses need to move swiftly to make sure they do not miss out on these opportunities.

Energy Programs

The Stimulus Bill includes approximately $30 billion for projects relating to the generation, transmission and distribution of renewable energy and approximately $5 billion for energy efficiency projects, including projects to weatherize certain properties. There are many opportunities for companies involved with the various aspects of renewable energy and energy efficiency to capitalize on the available funding within the Stimulus Bill. There may also be funds available for commercial or industrial property owners to help fund investments in energy efficiency technologies which have the potential to significantly reduce the future property operating costs. 

• Renewable Energy. Allocations in the Stimulus Bill include (a) $6 billion in loan guarantees for renewable energy generation and transmission projects, (b) $11 billion for research, development and pilot programs relating to the so-called “Smart Grid,” which will enable greater development and use of renewable power sources, and (c) $2.5 billion for research related to renewable energy and energy efficiency. Also included in the Stimulus Bill are tax cuts for businesses investing in renewable energy technologies.  Here is the link to the US Department of Energy discussion of the Stimulus Bill: http://www.energy.gov/recovery/index.htm
   
• Energy Efficiency. The Stimulus Bill also includes (a) $5.25 billion to make lower income housing more energy efficient, (b) $6.3 billion in grants for state and local government energy efficiency investments and (c) $300 million for consumer rebates for purchasers of energy efficient “Energy Star” appliances. The Stimulus Bill also includes tax cuts for individuals investing in residential energy efficiency improvements.

Environmental Programs

In total, the Stimulus Bill includes approximately $18.8 billion dollars in federal spending for environmental projects relating to site remediation, water infrastructure and flood control and mitigation projects. There may be opportunities to include funding for water infrastructure projects into on-going or planned development or redevelopment projects. Additionally, increased funding to the federal brownfields program may provide sufficient stimulus to continue planned redevelopments.

• Property Remediation. $600 million is allocated to the United States Environmental Protection Agency to fund the cleanup of hazardous waste sites listed on the National Priorities List, which is the USEPA’s list of some of the most contaminated sites in the nation. With this increased spending to cleanup Superfund sites, we expect there to be a potential rise in federal cost recovery litigation as the USEPA attempts to recoup those cleanup costs from the responsible parties. An additional $200 million is allocated to cleaning up properties with leaking underground storage tanks, and $100 million is allocated for grants providing for the cleanup and redevelopment of brownfields sites. Here is the link to the USEPA brownfields program: http://www.epa.gov/brownfields/
   
• Clean Water State Revolving Fund.  $4 billion is allocated to the states to fund loans administered under the Clean Water State Revolving Fund. This fund is designed to upgrade wastewater treatment systems and address stormwater management, nonpoint source pollution, and watershed and estuary management projects nationwide.   Here is the link to the Clean Water State Revolving Fund: http://www.epa.gov/owm/cwfinance/cwsrf/index.htm
   
• Drinking Water State Revolving Fund. $2 billion is allocated to the states to fund loans administered under the Drinking Water State Revolving Fund. This Fund provides loans to support infrastructure investments for both publicly and privately owned community water systems. Here is the link to the Drinking Water State Revolving Fund: http://www.epa.gov/safewater/dwsrf/index.html#facts
   
• Other Water Infrastructure. $4.6 billion is allocated to the US Army Corps of Engineers for projects such as environmental restoration, flood protection and dam projects. An additional $340 million is allocated to the Natural Resources Conservation Service, an entity within the US Department of Agriculture, for watershed improvement projects, including flood protection projects and water quality protection programs. Here is the link to the Natural Resources Conservation Service: http://www.nrcs.usda.gov/

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Businesses and property owners can use solar systems to reduce their annual energy costs and even generate income. The cost of installing these systems is significant. However, there are a number of incentives from the federal and state governments that reduce the upfront costs of solar system installation and generate money for many years after the initial repayment period.        

For upfront costs, the Federal Investment Tax Credit (FITC) provides a 30% tax credit for solar energy systems, so that you can take 30% of the cost of the solar system as a credit against taxes you would otherwise have to pay. The tax credit was recently extended for eight years. Front loaded depreciation is another significant tax incentive. In northern New Jersey, PSE&G's solar loan program may provide financing for 40-60% of the cost of installing a solar system which can be repaid in cash or with credits for energy produced.

Government incentives also make the use of solar systems more profitable. New Jersey is transitioning from a system of rebates to encourage solar system installations to a system of “solar renewable energy certificates” (“SRECs”) based on the amount of energy produced by the system, which can be sold, traded and, in some cases, used to repay loans for installation. “Net metering” also creates economic benefit because it allows a solar system owner to earn money for any excess power the system generates and returns to the electrical grid and of course having solar power reduces operating costs by reducing or eliminating the need to buy electricity from the utility.

Businesses can take advantage of these incentives directly or they can lease the solar system from a third party under a power purchase agreement. In that arrangement, the business avoids upfront costs, agrees to buy power at a discounted rate and passes the incentives to the third party. It is advisable for businesses to consult with legal professionals when entering into contracts with installers and power purchase agreements. 

*This article originally ran in the February 17, 2009 issue of NorthJersey.com

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The New Jersey Department of Environmental Protection ("DEP") is expected to adopt new rules governing the reporting of emissions of certain greenhouse gases in the near future.  These new rules were proposed recently pursuant to the Global Warming Response Act of 2007, which required the DEP to establish a greenhouse gas emission monitoring and reporting system.  Greenhouse gases that are subject to the proposed rules include refrigerants such as hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs), methane, nitrous oxide, sulfur hexafluoride, ethers and halogentated ethers.  The aim of the rule amendments is to generate information on major sources of greenhouse gases as part of a strategy to meet future goals to reduce emissions.

The change in emission reporting requirements will affect numerous types of facilities.  Among the most likely to be impacted are facilities with large refrigeration systems such as supermarkets, restaurants and cold storage warehouses such as those used to store perishable foods.  In addition, various industrial processing facilities.  Finally the new rules would likely change requirements for many landfills and wastewater treatment facilities.

The proposed rules would change the requirements for emission statements under the Air Pollution Control Rules by requiring greenhouse gas reporting requirements for more facilities.  The rule would also amend the Worker and Community Right to Know Rules by requiring reporting concerning the amount of fossil fuels used by certain facilities subject to the Worker and Community Right to Know Act Rules including prime suppliers of fossil fuels, gas public utilities, and natural gas pipeline operators.

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In June 2008, the United States Environmental Protection Agency announced a $4.3 million dollar settlement against four national residential real estate development companies. The government alleged that those companies violated the federal Clean Water Act (“CWA”) requirements addressing the discharge of stormwater (i.e., rainwater/snow melt runoff) from construction sites. Under the CWA, a permit and a stormwater management plan are required for the discharge of stormwater from a construction site. The EPA alleged that the companies had either not obtained a permit before commencing their construction activities or failed to abide by the terms of permits they had obtained. This enforcement action follows several other recent high profile stormwater permit enforcement actions undertaken over the past several years that resulted in $4.4 million dollars in penalties against two national box retail stores.

The CWA generally requires that a developer obtain a stormwater discharge permit before starting construction activities at a property. It allows states to assume the role of the permitting authority for stormwater permits. Delaware, New Jersey, New York and Maryland have been delegated such permitting authority from the EPA. As such, the state environmental agency within a delegated state issues permits for stormwater discharges under the CWA. EPA retains oversight authority over the state stormwater permitting programs – that is why the recent enforcement actions were brought by the EPA.

In New Jersey, a construction project which will disturb more than one acre of land requires a stormwater discharge permit. The state Department of Environmental Protection (“DEP”) has established a general stormwater discharge permit for construction activities, through which the DEP pre-determined that any construction projects meeting the criteria for the general permit will be covered by the general permit. (There are also general stormwater permits for industrial facilities, concrete manufacturers and other business categories, which permits address stormwater runoff from the operation of covered facilities.) To obtain coverage under the construction general permit, the developer must submit a Request for Authorization to the local Soil Conservation District for their approval. This is unlike an individual discharge permit, which requires a detailed state engineering review.

Obtaining the general stormwater permit for construction activities is, however, only the first step towards compliance with the CWA’s stormwater requirements. Once the permit is in place, the permit holder must comply with the terms of that permit. Failing to abide by the terms of the permit is also a violation of law which exposes the developer significant penalties. The most important component of the general stormwater construction permit is the development and certification of a Stormwater Pollution Prevention Plan 

The SWPPP consists of a soil erosion and sediment control element and a construction site waste control component. The soil erosion and sediment control element is governed by a soil erosion and sediment control plan and includes controls such as silt fences to minimize soil runoff. The construction site waste control element contains requirements which address materials management to prevent or reduce waste and waste handling, which in turn reduces the potential for such waste materials to flow off-site with stormwater. Examples of construction site waste include waste building material and rubble, chemical waste, litter, sanitary sewage, contaminated soils and concrete truck washout.

By obtaining a permit for stormwater discharges at construction sites, and complying with the terms of the SWPPP, a developer will avoid a potentially costly enforcement action by the state or the EPA. The EPA has sent a very strong signal to the regulated community that it takes stormwater discharges and compliance with the CWA very seriously. A developer must ensure that its professional team, including engineers, construction managers and attorneys, are paying close attention to stormwater permitting requirements to avoid such costly mistakes.

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On March 31, 2008, the United  States Environmental Protection Agency (“EPA”), under the authority of the federal Toxic Substances Control Act, issued new rules governing home improvement contractors and maintenance companies engaged in the renovation and repair of houses, child‑care facilities and schools constructed before 1978.  The purpose of the rule is to protect children from lead paint hazards in places they frequent.  EPA’s rules require that by April 2010, contractors and maintenance professionals performing renovation activities be certified and their employees trained by certified renovators.  The rules also require that these companies use safe work practices to eliminate airborne lead exposure from the renovation activities.

The rule applies to home improvement contractors, maintenance workers in multi‑family housing, painters and other trades engaged in renovation activities.  The covered facilities include residential, public or commercial buildings where children under the age of 6 are present on a regular basis, as well as all rental housing.  The rule applies to renovation, repair or repainting activity.  The only exceptions are (i) owner‑occupied housing where children under six or a pregnant woman do not reside; (ii) minor maintenance or repair activities affecting six square feet or less of lead based paint in a room or 20 square feet or less of lead based paint on the exterior of a building and (iii) renovations that do not involve the disturbance of lead based paint.  Determining whether a project is lead free must be made by a certified renovator using an EPA recognized test kit.

The rule prohibits certain unsafe work practices such as flame burning or torching; and sanding, grinding, or blasting with power tools.  It also prohibits the use of equipment not equipped with high efficiency vacuum attachments to minimize or eliminate airborne dust.

A certified renovator must be assigned to each renovation project to direct and train uncertified workers and to insure that all work is performed in accordance with applicable work practices and standards as outlined in the rules.  A renovator can become certified by successfully completing an EPA approved accredited training course.  To maintain the certification, a person must complete an accredited refresher course every five years.

While these regulations directly impact the companies doing the renovations, property owners must remember that they are ultimately responsible for the safety of their tenants.  It is imperative, therefore, that property owners make sure that the contractor intends to comply with the EPA’s regulations and minimize lead hazards during the work.  Any contract between the property owner and renovation contractor should, at a minimum, include a provision requiring the contractor to comply with all laws during the performance of the work and an indemnification provision whereby the contractor agrees to defend and indemnify the property owner from lawsuits arising from the contractor’s work.  Since an indemnification is only as good as the company’s assets, a property owner is well advised to require the contractor to have insurance naming the property owner as an additional named insured on the policy.  As an additional named insured, the property owner will be in a position to make a claim against the contractor’s insurance policy.  By taking these precautions, property owners will minimize their exposure to potential liability if the contractor fails to comply with these regulations.

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On January 4, 2008, the New Jersey legislature passed the Environmental Enforcement Enhancement Act. This Act enhances the enforcement authority of the New Jersey Department of Environmental Protection (“DEP”) under ten environmental statutes: Waterfront Development Act, Pesticide Control Act of 1971, Wetlands Act of 1970, Freshwater Protection Act, Coastal Area Facility Review Act, Endangered and Nongame Species Conservation Act, Water Supply Management Act, Safe Dam Act, Safe Drinking Water Act, and the Flood Hazard Area Control Act. The Act also amends the DEP enabling statute by clarifying DEP’s authority to inspect facilities, collect samples and copy documents to determine compliance with environmental laws, regulations, permits, and orders.

The Act strengthens the enforcement provisions of the ten statutes listed above and substantially increases the penalties DEP may seek against violators. The Act greatly broadens the enforcement authority of the DEP by authorizing it to issue an order requiring any person to comply, to bring a civil action, to levy a civil administrative penalty, or to petition the attorney general to bring a criminal action if a violation occurs. The amendments are substantial because many statutes prior to the passage of the Act only contained minimal penalties for violators or did not contain any provisions for assessing administrative penalties. For example, the Waterfront Development Act’s previous maximum penalty was $1,000 with an additional fine of $100 for each day the violation continued. As amended the penalty is increased to $25,000 per violation, per day. 

To help ensure compliance with environmental statutes, the Act significantly increases civil and criminal penalties including the following changes: (1) uniformly increases the maximum civil penalty amount to $25,000 per day; (2) authorizes daily penalty assessments for continuing violations; (3) authorizes the recovery of compensatory damages for loss or destruction of natural resources (e.g.-creates authority for DEP to recover natural resource damages, which are money damages from anyone responsible for spills or discharges of hazardous substances); (4) authorizes the DEP to recover reasonable costs incurred by the State in removing or correcting a violation, and to recover all reasonable costs incurred in bringing a civil action, which could be interpreted to mean recovery of attorneys’ fees; and (4) clarifies and in some statutes creates criminal provisions for purposeful, knowing, and reckless violations or falsifications. In addition, the Act broadens the DEP’s authority to compel a property owner to record a deed notice on its property where an alleged violation has occurred, under acts such as the Dam Safety Act or the Flood Hazard Protection Act. Prior to the Act’s passage the DEP only had this authority for a violation of the Freshwater Wetlands Protection Act. In fact, the Act allows DEP to require the recording of such a notice based only upon an allegation prior to adjudication.

With the passage of this Act, DEP has increased its enforcement authority and permits it to seek higher penalties for violations that may have previously been cost effective to commit and new avenues to seek such penalties. Its passage will likely lead to an increase in enforcement actions brought by the DEP.

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