october 2006

DEP Adoption of Grace Period Rules May Heighten Penalty Risk

BACKGROUND

New Jersey DEP has adopted rules, effective September 18, 2006, to implement the state's Grace Period Law enacted in 1995. Pursuant to the law's requirements, the rules designate violations of New Jersey's environmental laws as either minor or non-minor, provide for grace periods within which parties may cure minor violations without penalty, and establish penalty matrixes. The rules, published on August 15, 2006, amend DEP’s oversight regulations to set forth penalties for violations of the Industrial Site Recovery Act, the Underground Storage of Hazardous Substances Act, the Technical Requirements for Site Remediation and the Oversight Rules.

Under the Grace Period Law, DEP must notify the person in writing of the minor violation and specify that a penalty may be imposed if the violation is not corrected within the applicable grace period. Grace periods range from 30 to 90 days and may be extended at DEP’s discretion by up to an additional 90 days. If compliance is not achieved within the grace period, DEP may impose a penalty retroactive to the initial date of the issuance of a Notice of Violation. Base penalties range from $3,000 to $8,000 for minor violations and from $5,000 to $20,000 for non-minor violations and can be assessed for each day that the violation continues.

Parties performing cleanups under a Memorandum of Agreement in DEP’s voluntary cleanup program are not subject to penalties, but are subject to having their MOAs terminated due to non-compliance. Those parties would have to pay a fee of $1,000 to re-enter the program, if DEP so allows, or alternatively, DEP could require the party to enter into an Administrative Consent Order to obtain DEP oversight. DEP can now also enforce compliance and penalties against a party whose Memorandum of Agreement has been terminated.

The anticipated procedure is that DEP will initially issue a Notice of Deficiency (rather than the current practice of conditional DEP approvals or comment letters). The notice would provide a period of time to achieve compliance. If compliance is not achieved, DEP would then issue a Notice of Violation. For parties under MOAs, DEP would alternatively issue a Notice of Intent to Terminate, which would provide additional time to come into compliance prior to termination.

WE RECOMMEND

Designate a point person to evaluate environmental compliance obligations and carefully review environmental submissions.

DEP’s adoption of the Grace Period rules may trigger DEP's use of its enforcement authority, so it is important to carefully track compliance obligations and review submissions to avoid deficiencies.

DEP guidance indicates that DEP will not issue a Notice of Deficiency where there has been a failure to make a submission. Failure to make a submission may result in the issuance of a Notice of Violation and a heightened risk of penalties without any advance notice.

Consider a submission using DEP’s Technical Review Panel to stay regulatory deadlines and penalties while technical disputes are resolved.

DEP has very specific guidelines for use of the panel. If they are not met, review may be denied.

If you have any questions concerning the Grace Period Law and regulations, please contact Susan C. Karp.