january 2004

Natural Resource Damages Initiative by New Jersey DEP – and DEP's Voluntary Settlement Option

BACKGROUND

New Jersey DEP is implementing an expanded program seeking Natural Resource Damages (NRDs) from parties responsible for environmental contamination. NRDs, which are being assessed by DEP as a separate obligation from cleanup responsibility, are designed to redress the historical harm of contamination to the State's ecology, particularly where groundwater, surface water or wetlands are affected.

DEP announced that it has begun the process of making more than 4,000 NRD claims over the coming months and years. The claims include certain cases where parties have already received No Further Action letters (NFAs) for their cleanup activities.

DEP indicates that it will not pursue NRDs against certain classes of parties or injuries, such as sites where contamination is limited to soils, and Brownfield developers who qualify for the innocent purchaser defense under State Law.

DEP has offered to negotiate favorable settlements with those who volunteer to resolve potential NRD liability before receiving a notice initiating a claim. However, DEP has not specified particular parties who are being targeted, or when those parties may expect to be notified.

WE RECOMMEND

If you are in the midst of remediation activities, or have received an NFA that relates to groundwater issues or includes post-NFA groundwater conditions, you should consult with environmental legal and technical professionals to evaluate your exposure to an NRD claim, and to evaluate whether to approach DEP for a voluntary settlement. NRDs must also be carefully considered in negotiating real estate and business transactions, and in environmental disputes and insurance claims.

If you have questions concerning NRDs, please contact David B. Farer, Richard J. Ericsson or Jay A. Jaffe.