may 2009
New Jersey Passes Major Site Remediation Reform Legislation
New "LSRP" Program Brings Most Significant Changes to State’s
Environmental Law since ECRA/ISRA and Brownfield Law
BACKGROUND
A profound change has come to the process of environmental investigations and cleanups in New Jersey with the May 7, 2009 enactment of a highly significant piece of legislation – the Site Remediation Reform Act (“SRRA” – S.1897/A.2962).
SRRA – with its new Licensed Site Remediation Professional (“LSRP”) Program – brings the most important changes to the New Jersey Department of Environmental Protection (“DEP”) Site Remediation Program since ECRA/ISRA (1983) and the state's Brownfield Law (1997). The new legislation will have a far-reaching impact on the way transactions and redevelopment projects are handled in New Jersey.
The legislation was reported out of the Senate Environment Committee, and the Assembly Environment and Solid Waste committee, on February 26, 2009 with support from DEP as well as the real estate and business community. The March 16, 2009 passage of the bill by the N.J. State Senate and Assembly followed over eight months of hearings and redrafts concerning legislation first introduced in June 2008.
HIGHLIGHTS OF THE BILL
Licensed Site Remediation Professionals and Their Role
SRRA establishes a licensing program for environmental consultants and contractors to be certified by DEP as LSRPs and overseen by a licensing board:
In a wide variety of settings and situations, only LSRPs will be authorized to sign and certify reports through the site investigation and cleanup process.
In many situations, DEP will no longer be required or authorized to review and approve investigation and cleanup plans in advance, or to issue No Further Action letters and Covenants Not To Sue at the conclusion of cleanups
Instead, the LSRPs will determine the propriety and conclusion of investigations and cleanups, and will issue the final sign-off document, to be known as a "Response Action Outcome" ("RAO").
LSRPs will have wide-ranging and strict responsibilities, derogation of which will lead to permit revocation and other penalties and enforcement actions.
LSRPs – rather than DEP – will determine the required amount of any financial assurance, and will determine when and to what extent the financial assurance can be reduced as a cleanup proceeds.
the LSRP issues the RAO, the party conducting the cleanup will be deemed to have received a Covenant Not to Sue by operation of law.
Following an LSRP’s issuance of a RAO, DEP will have three years to audit the LSRP’s work, though the bases for DEP to invalidate a RAO are relatively narrow.
DEP is to establish mandatory timeframes for all phases of investigations and cleanups.
Switching Over to the New LSRP Program
DEP has 6 months after enactment of SSRA to issue interim rules for implementing the new law, and 3 months to establish a temporary licensing program for LSRPs.
Once the interim rules and temporary licensing program are in place, all new projects subject to NJ's Site Remediation Program will be overseen by LSRPs rather than DEP, unless they fall into specific exceptions such as sites that are ranked most highly on a new ranking system.
Parties currently under DEP oversight for existing cases will have up to three years to switch over to the LSRP program, providing they do not fall within one of the exceptions.
New Reporting Requirements
Until now, it has been the responsibility of a property owner or operator – and not third parties such as environmental consultants – to report knowledge of spills, discharges, or evidence of contamination to DEP, except as to spills or discharges from regulated underground storage tank systems.
Under SRRA, LSRPs will now have affirmative obligations to report knowledge of contamination to DEP in a variety of settings.
ISRA
Once the new LSRP program is established and running, many parties subject to New Jersey's transaction-triggered environmental law – the Industrial Site Recovery Act (“ISRA”) – will be proceeding with an LSRP rather than under DEP oversight.
As to the current pre-conditions to closing of title under ISRA:
Rather than entering a Remediation Agreement with DEP, the subject party will be able to close pursuant to an LSRP's Remediation Certification, which will include the LSRP’s evaluation of the appropriate financial assurance and certification that the assurance has been established.
Rather than awaiting DEP approval of a Remedial Action Workplan ("RAW"), an LSRP-certified RAW will suffice.
Rather than seeking an NFA, a subject party will conclude its requirements through an LSRP-issued RAO.
Other Site Remediation Program Changes
DEP is directed to establish a permitting program for institutional and engineering controls, with specific financial assurance requirements.
The Spill Act's innocent purchaser requirements are modified so that LSRP-certified work is deemed equivalent to that overseen and approved by DEP.
DEP is directed to establish a new site-ranking system of priority remediation sites within a year of enactment, and DEP may choose to retain oversight of properties in the highest category, rather than relying on LSRP certifications.
Within a year, DEP is directed to establish "presumptive remedies" for cleanups of residential properties, schools and day care facilities. Such projects are to be cleaned up to unrestricted use standards, or pursuant to a presumptive remedy, with certain exceptions available on a case-by-case basis.
The list of permissible cleanup financial assurances is expanded to include letters of credit.
Qualification for use of a self-guarantee as the financial assurance is modified to require that proof of financial wherewithal include audited financial statements in which the auditor expresses an "unqualified opinion" as to the assets and liabilities of the applicant.
NEXT STEPS
A more comprehensive analysis of the new law can be found in our library . We will closely monitor DEP’s development of the LSRP licensing process and interim rules and related developments, and will keep you advised accordingly.
If you have any questions concerning the Site Remediation Reform Act or the new site remediation process in New Jersey, please contact David B. Farer.
