The Site Remediation Reform Act (“SRRA”) authorizes responsible parties to retain Licensed Site Remediation Professionals (“LSRPs”) to oversee the remediation of contaminated sites. However, if the person responsible for conducting remediation (“PRCR”) fails to complete the investigation and remediation within mandatory timeframes, the New Jersey Department of Environmental Protection (the “NJDEP” or “Department”) automatically places the site into “Direct Oversight.” Direct Oversight can significantly increase the cost of the investigation and remediation because the responsible party’s LSRP no longer directs the remediation without NJDEP approval and the responsible party becomes subject to additional financial obligations and regulatory requirements.
While the Department previously has been willing to relax the rather onerous requirements of Direct Oversight under certain circumstances (see our July 14, 2017 blog post titled “NJDEP Offers Relief from Strict Compliance with Direct Oversight Requirements for those Willing to Enter into Administrative Consent Orders”), this practice was recently codified into law through amendments to SRRA (colloquially referred to as SRRA 2.0). SRRA now clearly provides that the Department may, in its discretion, relax the requirements of Direct Oversight for parties that demonstrate a willingness to move forward responsibly and diligently with remediation. In furtherance of this practice, in August (coincident with the enactment of SRRA 2.0), the NJDEP issued guidance explaining how responsible parties with sites in the NJDEP’s Direct Oversight protocol can “earn” adjustments to the Direct Oversight requirements.
According to the guidance, the NJDEP may enter into Administrative Consent Orders (“Direct Oversight ACOs”) through which the PRCR will agree to remediate under relaxed Direct Oversight requirements. In order to be eligible to enter into a Direct Oversight ACO, the PRCR must:
- be current on payment of its annual remediation fees;
- retain an LSRP, if one has not already been retained for the site;
- contact the NJDEP Compliance Assistance duty officer;
- submit a proposed public participation plan, an initial remediation cost review and establish a remediation funding source (all within 90 days of triggering Direct Oversight), and
- agree to settle any penalties.
Upon entering into a Direct Oversight ACO, the PRCR may be relieved of certain requirements of Direct Oversight. For instance, the PRCR may:
- choose the remedial action for the site without prior NJDEP approval;
- pay annual remediation fees in lieu of Direct Oversight costs;
- use any of the prescribed remediation funding source mechanisms (except for a self-guarantee), rather than being obligated to establish a remediation trust fund; and
- avoid the requirement to prepare and submit to the NJDEP a Direct Oversight remediation summary report or a remedial action feasibility study.
However, the NJDEP’s guidance specifically notes that if a PRCR fails to comply with the Direct Oversight ACO (including further violation of any applicable regulatory or mandatory timeframes), the NJDEP may rescind the Direct Oversight ACO and the PRCR may again be subject to all of the standard Direct Oversight requirements, as well as stipulated penalties assessed for each day of noncompliance.
The adjustments being offered by the NJDEP through the Direct Oversight ACO process are not insignificant. These adjustments could substantially reduce the costs and penalties associated with Direct Oversight and put the decision-making back into the hands of the responsible party and its LSRP. As such, responsible parties subject to Direct Oversight should seriously consider taking a proactive approach by seeking a favorable Direct Oversight ACO with the NJDEP.
As explained in our July 2017 blog post cited above, adjustments to Direct Oversight also are available via “Prospective Purchaser ACOs” for certain parties that purchase and agree to remediate contaminated sites that are already subject to Direct Oversight.