june 2008

Senate Proposes New Legislation That Would Significantly Impact Site Remediation in New Jersey

BACKGROUND

On June 5, 2008, new legislation was introduced that would significantly impact the New Jersey Department of Environmental Protection (“DEP”) Site Remediation Program.

Introduction of the bill (S1897), sponsored by Senator Bob Smith, follows recent hearings before the state's Senate Environment Committee and Assembly Environment and Solid Waste Committee at which DEP recommended many of the proposed reforms set out in the bill.

Licensed Site Remediation Professionals

S1897 would establish a licensing program for environmental consultants and contractors to be certified by DEP as "licensed site remediation professionals" (“LSRPs”):

Only LSRPs would be permitted to submit (and in certain situations to sign and certify) reports to DEP on a wide range of remedial projects.

LSRPs would be required to carry at least minimum amounts of insurance for property damage, personal injury and professional liability/E&O ($2M per occurence/$5M aggregate for each) and pollution/property damage ($5M).

A code of professional conduct would be established, including an obligation for LSRPs to report directly to DEP in the event a discharge or threat of discharge is identified which meets a new definition of "immediate environmental concern".

LSRPs would be protected against retaliation for actions taken in compliance with the new law and code of conduct.

Changes to Environmental Cleanup Laws

S1897 would also implement other important changes to the state's environmental cleanup laws, including the Spill Act, ISRA and the Brownfield redevelopment program, including the following:

Mandatory timeframes would be established for performing remediation.

The Spill Act's discharge notification provision would be amended to require that a responsible party commence remediation of the discharge unless DEP has already directed another party to do so, and would require submission of a remediation report within 180 days after the discharge.

The requirement for establishment of a financial assurance for cleanup would be extended to those conducting voluntary remediation.

While self-guarantees would still be accepted as a form of financial assurance, the maximum self-guarantee would be limited to $1M. The applicant would have to demonstrate that cleanup costs do not exceed one-tenth of the party's equity, and would be required to meet a higher standard of financial reporting.

Letters of credit would once again be an acceptable form of financial assurance.

In instances where cleanups are to less than an unrestricted use standard, then upon issuance of DEP's no further action letter the person responsible for conducting the cleanup would be required to pay a surcharge to DEP in the amount of 5% of the cleanup, regardless of whether DEP requires continued maintenance of a financial assurance.

DEP would be given greater discretion to disapprove the applicant's choice of a remedial action for a site where DEP finds that the proposed remedial action would render the property inappropriate for its future use.

Remediation Site Classification System

S1897 would also create a new 4-tier classification system for remediation sites, as follows:

Tier 1: Sites where the responsible party has been recalcitrant and has failed to complete a remedial investigation after particular, extended periods of time.

Tier 2: Sites including those that are high priorities for economic development; or within brownfield development or other economic development priority areas; or posing significant detrimental impact on the public or environment; or affecting sensitive populations such as childcare or school facilities; or subject to federal oversight.

Tier 3: Sites other than Tier 1, 2 or 4 sites.

Tier 4: Sites involving leaks from unregulated heating oil tanks provided there are no immediate concerns such as impact on potable wells or vapor intrusion risks.

Tier 1, 2 and 3 sites would require the involvement of LSRPs, while a Tier 4 site would require either LSRPs or subsurface evaluators. However, any responsible party would be allowed to submit Preliminary Assessments/Site Investigations for sites where a no further action letter is sought based on showing that that the Preliminary Assessments/Site Investigations indicates no contamination above prevailing standards.

At Tier 1 sites, DEP would review and approve/disapprove all LSRP submissions and select the remedial action. Financial assurance would be required in the form of a trust fund, with DEP to pre-approve any payments out of the trust fund.

At Tier 2 sites, DEP would review and approve/disapprove all LSRP submissions.

At Tier 3 sites, DEP would review screening documents and certifications submitted by the LSRP.

At Tier 4 sites, DEP would review required checklists and certifications.

NEXT STEPS

The Senate Environmental Committee met on June 16, 2008 with representatives of DEP, the regulated community and public interest groups. Further hearings and legislative amendments are anticipated after Labor Day. We will closely monitor all developments and keep you advised accordingly.

If you have any questions concerning S1897 or the site remediation process in New Jersey, please contact David B. Farer at (908)789-8550, or by email at dfarer@farerlaw.com.