Environmental UPDATE May 2009
New Jersey’s Site Remediation Reform Act
The New Jersey Site Remediation Reform Act, P.L. 2009, ch. 60, ("Reform Act"), effective May 7, 2009, will change the way contaminated sites are remediated in New Jersey, as dramatically as the changes wrought by ECRA or ISRA or the Brownfields Act. The state Department of Environmental Protection ("NJDEP") will have a reduced oversight role on the vast majority of site cleanups, no longer reviewing all work or issuing No Further Action letters. Instead, private Licensed Site Remediation Professionals ("LSRPs") will issue Response Action Outcomes, or "RAOs", to certify that the investigation and cleanup of contaminated sites are completed in accordance with state standards. NJDEP's role on these sites will be limited to reviewing checklists submitted by the LSRP and auditing the work.
The purpose of the Reform Act is to streamline and improve cleanups of the 20,000 contaminated sites backlogged at NJDEP, so as to incentivize the redevelopment of the state's many brownfields. The 2006 "Kiddie Kollege" incident, in which children were exposed to mercury contamination at a day care built in an old factory, laid bare the urgent need to reform the process and to more appropriately direct resources to the cleanup of contaminated sites. The Commissioner of NJDEP was forced to declare the existing site remediation program "broken."
The Reform Act is the culmination of over two years of work by NJDEP, Senator Bob Smith and other legislators, as well as a variety of stakeholders from the business, government and environmental sectors who actively participated in a stakeholder process. Environmental groups (who sat at the stakeholder table) oppose the Reform Act on the grounds that it puts "the fox in charge of the henhouse" since oversight would be largely transferred to LSRPs who work for parties responsible for the cleanups. Given limited public resources to oversee cleanups, however, no reasonable alternative to an LSRP program has been offered that would significantly lessen the NJDEP backlog. When he signed the Reform Act into law, Governor Jon S. Corzine also issued an Executive Order instructing NJDEP to implement additional measures to ensure protection of public health and the environment.
The Reform Act does more than just establish LSRPs as the new way to clean up contaminated sites. It proposes a licensing board and rigorous criteria to qualify environmental professionals as LSRPs. This newest profession is subject to a Code of Conduct and Ethics -- an LSRP's "highest priority" is the protection of public health and the environment -- and significant penalties against those who fall short of strict, professional standards. The Reform Act includes a hierarchy of technical standards and guidance for LSRPs who will exercise professional judgment to remediate contaminated sites. It also expressly requires for the first time that any person responsible for a hazardous substance pursuant to the Spill Compensation and Control Act must commence a cleanup promptly, using an LSRP, and complete the cleanup within timeframes mandated by the NJDEP. All of this is intended to provide a much-needed jumpstart to cleanups.
The legislation includes a wish list of other site remediation reforms -- advocated mainly by NJDEP and environmental groups -- intended to improve the quality of cleanups. At certain sites where sensitive receptors are present, or where responsible parties are slow to address contamination, NJDEP will assume a more aggressive Direct Oversight role, reviewing all site investigation work, administering a remediation trust fund established by the remediating party, requiring public participation and comment to the remedial plans, and selecting the remedy. The legislation also establishes a new permit program to track use and maintenance of engineering and institutional controls; requires use of presumptive remedies or unrestricted use standards for many residential sites, schools and child care facilities; allows NJDEP to establish "acute soil cleanup standards"; limits work of previously certified "subsurface evaluators" to unregulated underground storage tanks; and extends the State's time to bring natural resource damage claims at many sites.
The Reform Act contains an aggressive time clock to establish the LSRP program and the many new regulations to be issued by NJDEP and the yet-to-be-formed LSRP licensing board. NJDEP is to establish a temporary licensing program within 90 days so that within six months, all new cases will use an interim LSRP. Within 18 months, the licensing board is to establish the permanent LSRP program, and within three years virtually all site remediation cases will be overseen by LSRPs. NJDEP has begun to "pilot" the LSRP program, accepting volunteers who want to get started now. Many "lower priority" cases addressing regulated underground storage tanks will be forced into a similar program in the near future.
The new LSRP program represents a dramatic change for cleanups in New Jersey. It will empower LSRPs to exercise independent professional judgment to clean up contaminated sites in a way that often has been absent when NJDEP has overseen consultant work. It will allow remediating parties to promptly plan and implement site cleanups without suffering the delays of an overburdened NJDEP, so that the state's brownfields can be redeveloped in real time. It will free NJDEP to direct resources to sites where public health or the environment are truly at risk.
The program established by the Reform Act is not perfect nor a panacea; there will be bumps in the road. Properly so, interested parties are cautious about the many new roles, responsibilities and requirements. The Reform Act, however, will streamline and improve the cleanup and redevelopment of brownfields in New Jersey and, in these economic times, this is sorely needed.
In the April 2008 Environmental Update, we reported upon the ambiguities contained in and challenges presented by the proposed amendments to the Oversight Rules and to the Technical Requirements for Site Remediation, and more specifically to the public notice requirements at N.J.A.C. 7:26E-1.4. Those amendments have been adopted and were published in the New Jersey Register on September 2, 2008. This article highlights how the adopted revisions deviate from the proposed amendments and how the agency responded to the challenges presented by implementation.
First, NJDEP has provided a one-year "phase-in" for sites currently undergoing remediation to allow responsible parties to come into compliance with the new rules; that period expires in September 2009. Thus, responsible parties will be given a period in which to satisfy the new amendments.
Second, in response to the comments received, a few revisions to the proposed amendments relating to notification requirements were made. The Department amended its proposed requirements for mailings at N.J.A.C. 7:26E-1.4(i)3, (j)1, (k)3 and (l) to provide for notification by mailing of notices using the United States Postal Service's Certificate of Mailing addressed to "Current Occupant" or "Current Recipient," an option not available for "Certified Mail." This option alleviates the need for responsible parties to specifically identify all intended recipients located within 200 feet of the site. Similarly, N.J.A.C. 7:26E-1.4(i)3i was revised to incorporate the concept of using current municipal tax duplicates to identify current owners within a given area.
The non-English speakers notification requirements were also revised so that all a responsible party must do is determine "if a language other than English is predominantly spoken by owners and tenants in the area within 200 feet of the property boundary," N.J.A.C. 7:26E-1.4(f)3, and record the information on the Sensitive Population and Resource checklist. If a language other than English is predominantly spoken in an area, notice must be provided in that non-English language. See N.J.A.C. 1.4(g)1 and (k)4. This is a change to the proposed rule in that the proposed rule required the person responsible for conducting the remediation to determine whether non-English speaking persons reside in, attend or use items listed on the checklist.
While responsible parties were always intended to have the option of either signage or mailings, N.J.A.C. 7:26E-1.4(g)2 was revised to allow for persons responsible for remediation to switch between the notice methods without prior agency approval.
The Department also implemented other changes to the proposed amendments. For example, N.J.A.C. 7:26E-1.4(k), which addresses notification in the case of contamination that has migrated off-site, provides for distribution of a fact sheet in the case of off-site migration. Moreover, upon adoption, the term "discovery" was changed to "determined" in the section that addresses when that fact sheet must be distributed, N.J.A.C. 7:26E-1.4(k)1i, to reflect the fact that definitive action is necessary to learn if contamination has migrated outside the identified area of concern or the site.
Finally, NJDEP specifically acknowledged that the notification process set forth in the regulations is new and requires flexibility. The Department seems committed to working with parties to approve alternate notification plans that meet the objectives of the rules, as provided in N.J.A.C. 7:26E-1.4(n). NJDEP notes however that parties who implement alternative plans without agency approval run the risk of their plans not being deemed consistent with the objectives of the rules and subjecting themselves to a violation.
Most violations of the amended rules are minor, with a 30-day grace period; penalty assessments therefore are not anticipated. Penalties are only anticipated if violations are not corrected within the grace period provided and settlement of penalties will be possible if compliance is attained quickly. NJDEP also acknowledged the possibility of obtaining approval for consolidated notices when there is coincidental overlap with other rule provisions. Only time will tell how flexible NJDEP will ultimately be.
New Jersey Appeals Court Upholds Right to Seek Access to Private Property to Investigate Suspected Contamination
A New Jersey appeals court recently upheld the right of a party to obtain an order from the Superior Court granting access to another's private property to investigate suspected contamination over the objections of the property's owner. This opinion, Tsungas Petroleum, Inc. v. Rypkema, A-4024-07T2, provides additional support to parties conducting environmental investigations, who often encounter resistance from off-site property owners who refuse to allow environmental testing on their property. Such remediating parties, who frequently are directed by NJDEP or the Environmental Protection Agency (“EPA”) to perform the offsite investigation, may have no choice but to petition the court for access to the offsite property.
Under N.J.S.A. 58:10B-16, if a party undertaking an environmental remediation requires access to property to investigate suspected contamination, he or she must make a good faith effort to negotiate reasonable terms of access with the owner. If the owner refuses, however, the party seeking access may petition the Superior Court for access to perform the work. To prevail, the party seeking access must show either that a reasonable possibility exists that contamination has migrated onto the owner's property or that access to the property is reasonable and necessary to remediate contamination. In the Tsungas Petroleum opinion, which is unpublished, the Appellate Division affirmed a Superior Court decision granting a party's petition for access to private property for the purpose of investigating suspected impacts to groundwater. The court characterized the access statute as requiring only a modest threshold, and granted access based upon a finding that a reasonable possibility existed that contamination had migrated onto the property.
Although New Jersey Court Rule 1:36-3 indicates that unpublished opinions are not binding on a court, this opinion may nevertheless be persuasive. Because there are no published opinions on the topic, a written opinion from the Appellate Division -- even if unpublished -- should carry some weight with and provide guidance to a trial court seeking to interpret the access statute. The opinion provides further support to parties conducting environmental investigations who are faced with intransigent property owners.
NJDEP recently issued a Draft Recommendation Report pursuant to the Global Warming Response Act, outlining methods to meet the greenhouse gas emission ("GHG") reductions required by the Act. The Act, which was passed in 2007, calls for the reduction of GHG emissions to 1990 levels by 2020 -- a 25% reduction below estimated 2020 emissions for a "business-as-usual" approach -- and further reduction of emissions to 80% below 2006 levels by 2050. The Act directed NJDEP to develop recommendations as to how the State could meet these reduction goals.
The Report emphasizes that the State will meet the 2020 statewide GHG emissions goal if it executes full and on-schedule implementation of the State Energy Master Plan, the State Law Emission Vehicle program and the Regional Greenhouse Gas Initiative. (For more information on the Global Warming Response Act, the State Energy Master Plan and the Regional Green House Gas Initiative, please see the November 2008 Environmental Update, which can be found on our website.) The Report recommends various additional legislative actions, including requiring adherence to green building guidelines for new construction and more water-related infrastructure retrofits, providing greater flexibility for municipalities to establish local green standards that exceed statewide requirements, requiring on-site tree preservation percentage requirements for new development, creating tax incentives for green building, and establishing the Garden State Climate Fund to facilitate voluntary emissions offsets. The Report further recommends that NJDEP establish standards for fossil fuel electric generating units and require flaring and electricity generation at Non-New Source Performance Standard landfills. Finally, the Report recommends that the legislature provide NJDEP and the Department of Transportation with the authority to develop and implement a Low Carbon Fuel Standard for vehicles, incentive programs for fuel efficient vehicles, and the encouragement of transit-oriented development and smart growth.
If implemented, the Report's recommendations will have tangible impacts on both future development, which will face new state and possibly local requirements, as well as existing buildings, which may require retrofits to meet more stringent code standards. The recommendations make some effort to offset the anticipated increased costs of these standards with tax and other financial incentive programs, such as maintaining the state sales tax exemption on solar and wind energy equipment and creating a property tax abatement or credit for buildings that meet green design standards.
On January 22, 2009, the New Jersey Superior Court ruled that the New Jersey Spill Act authorizes the State to recover damages for injuries to natural resources attributable to discharges that occurred prior to the Act's enactment in 1977. New Jersey Department of Environmental Protection v. Exxon Mobil Corp., N.J. Super. Ct., No. UNN-L-3026-04, 1/22/09. In this case, NJDEP brought suit against Exxon Mobil for alleged natural resource damages ("NRD") at refinery sites in Bayonne and Linden, New Jersey. Although Exxon Mobil had been remediating the two sites under administrative consent orders with NJDEP, the State sought additional compensation for the public's alleged loss of or lost use of natural resources due to the contamination at the sites.
A 1979 amendment to the Spill Act authorizes NJDEP to recover cleanup costs for discharges that predate the Act. In 1990, the Legislature decided to further extend the scope of the Act by authorizing recovery for damages to the state's natural resources. Here, the Superior Court determined that under the Spill Act's broad implied powers, the two amendments should be read in conjunction to allow the State to recover for NRD caused by discharges that predate the Spill Act.
In addition to the aforementioned decision to extend NRD to pre-Spill Act discharges, the Court made two additional noteworthy determinations. The Court held that the State's common law claims for nuisance and trespass were subject to a 10 year statute of limitations, and thus did not fit within the more expansive statute of limitations for environmental statutes under N.J.S.A. 58:10B-17, which does not accrue until the contaminated site has been remediated.
The Court determined further that the Spill Act allows awards of counsel fees for "all legal costs associated with remediation and restoration of a contaminated site, but not for loss of or loss of use of natural resources as those are intended solely for money damages, not remediation." The Court's ruling concerning the award of counsel fees for the recovery of NRD is ambiguous, at least from a practical standpoint. According to the Court, attorney's fees are recoverable for costs associated with remediation of the site, but not for monetary damages under the NRD claim. Given the ruling, it will be difficult for both courts and practitioners to differentiate the attorney's fees attributable to remediation from those attributable to monetary NRD damages.
This case is significant not only because it extended NRD to pre-Spill Act discharges, but also because attorney's fees will not be awarded for legal costs associated with recovery of NRD. This ruling seems to prevent fee shifting arrangements, making it difficult for the State to engage outside lawyers to pursue NRD cases. In this economic climate, this could dramatically reduce the number of NRD lawsuits the State initiates.
Under NJDEP’s revised Water Quality Management Planning Rules, N.J.A.C. 7:15 et seq., which were adopted on July 7, 2008, authority for Wastewater Management Plans ("WMPs") has shifted to each county's Board of Chosen Freeholders away from separate water service designations. The deadline for submission of county-wide WMPs by county boards to the NJDEP was April 7, 2009, nine months after the July 7, 2008 re-adoption of the rules, though several counties have requested extensions to the deadline.
If a county submitted a draft WMP prior to the April 7, 2009 deadline, the existing wastewater service designations will remain in place until the draft WMP is disapproved or adopted as a new WMP. On the other hand, if a county failed to satisfy the April 7 deadline and did not obtain an extension, all general service areas within the county (then wastewater service areas) were withdrawn, effectively placing a moratorium on development in the affected county because the types of projects that would be permitted are extremely limited.
The updated WMPs will show revised Sewer Service Areas ("SSAs"), based on certain development constraints. WMPs must reflect a complete build-out analysis of the entire watershed under existing zoning, and map a list of environmental features. The intent of this change is to ensure that development can plan for water quality issues along with environmental constraints. Sewer service may not be provided to properties falling outside the SSAs, such as properties in environmentally sensitive areas, and if a property lies outside a SSA, development will be effectively limited to septic systems with no more than 2,000 gallons per day of discharge.
Much of the content of the new WMPs are to be supplied by municipalities to the county boards, including ordinances, maps, septic management plans and employment and populations projections. Each municipality will be a separate chapter in a WMP, and the Department will review and consider WMPs on a chapter-by-chapter basis. Municipalities may submit a WMP upon DEP approval, and has 90 days from the approval to submit a WMP.
The EPA regulates the disturbance of wetlands associated with the "waters of the United States." Generally speaking, those federal wetlands are found along tidal waters, navigable rivers, and the streams and tributaries that flow into them. In most states, the disturbance of any other wetlands are unregulated. Consequently, there is frequently a regulatory battle in most states to determine whether wetlands at the fringes of the federal government's reach, particularly isolated wetlands, are subject to regulatory restrictions. In New Jersey, however, all wetlands are regulated. Indeed, New Jersey is one of only two states that has been delegated by the authority to regulate wetlands that would otherwise be regulated by the EPA. Thus, it is the common wisdom in New Jersey that it does not matter much whether wetlands are federal wetlands (those ordinarily subject to EPA jurisdiction) or freshwater wetlands (all other wetlands) because they are regulated either way. But, due to recent changes regarding jurisdiction over federal wetlands, coupled with more onerous regulations for freshwater wetlands, it may be time to revisit that common wisdom.
As we discussed in the September 2006 Environmental Update, the United States Supreme Court rendered a fractured decision that attempted to resolve these questions involving isolated wetlands and federal jurisdiction. See Rapanos v. United States, 126 S. Ct. 2208 (2006). Unfortunately, the Justices were not able to reach a majority agreement on this issue, and the Rapanos decision created two tests as to federal jurisdiction over wetlands. The first, authored by Justice Scalia in a plurality opinion, provided an extremely narrow definition of "waters of the United States," finding that wetlands would not be regulated unless they had a continuous surface water connection to the rivers and streams that make up the navigable waters of the United States. The second, authored by Justice Kennedy in a concurring opinion, provided a broader test that required the federal government on a case-by-case basis to determine whether there is a "significant nexus" between the wetlands in question and navigable waters. The "significant nexus" test would involve a case-by-case analysis of chemical, physical and biological connections of a particular wetland to a navigable water, to determine whether federal jurisdiction should be extended to that wetland.
Ostensibly, to resolve the new questions raised by that fractured Rapanos decision, and as we discussed in the November 2007 Environmental Update, the Army Corps of Engineers and the EPA endeavored to develop a revised guidance document that addresses when those agencies would assert jurisdiction over seemingly-isolated wetlands. On December 2, 2008, that revised guidance was finally issued. It failed, however, to resolve the problem created, as it memorialized both Justice Scalia and Justice Kennedy's positions. Essentially, the guidance indicates that the agencies will always exercise jurisdiction over those wetlands that fit within Justice Scalia's definition, and the agencies will evaluate on a case-by-case basis whether to exercise jurisdiction over those wetlands that may have a "significant nexus" to navigable waters.
Meanwhile, in the fall of 2008, NJDEP enacted amendments to New Jersey's freshwater wetlands regulations, N.J.A.C. 7A-1.1 et seq., which amendments significantly increase the cost and complexity of obtaining permits for the disturbance of freshwater wetlands. Moreover, those amendments increase the likelihood that certain uses of freshwater wetlands will not be permitted at all. These dual regulatory changes -- EPA's regulatory authority over isolated wetlands with a "significant nexus" to navigable waters coupled with increased difficulty and cost associated with the use of New Jersey's freshwater wetlands -- suggest a potential opportunity.
While EPA delegated authority to New Jersey to regulate federal wetlands, it retained that authority with regard to federal wetlands along interstate navigable and tidal water bodies, specifically, the Hudson River, the Delaware River and Greenwood Lake. Thus, the potential opportunity is for those seemingly freshwater wetlands that are near water bodies that are subject to EPA authority; it may be worthwhile for permit applicants to obtain federal jurisdiction and EPA regulation of their wetlands. This potentially-arduous step would only make sense in instances where the New Jersey freshwater wetlands regulations would now render a prospective freshwater wetlands disturbance impermissible or impracticable. But in those cases, establishing federal jurisdiction might provide an opportunity for completing a project that would otherwise be regulatorily blocked by more onerous NJDEP regulations.
EO 131 - Directs all state entities involved in decisions that affect environmental quality and public health to provide opportunities for input by representatives of low-income and minority groups. The order further creates the Environmental Justice Advisory Council to make recommendations to the state Commissioner of the NJDEP regarding issues of environmental justice and equality.
A2867 - The "Permit Extension Act of 2008." Allows for extension of permit expiration dates beginning January 1, 2007 and continuing through July 1, 2010. The Act applies to documents such as wetlands permits, treatment works approvals, on-site wastewater disposal permits, stream encroachment permits, flood hazard area permits and highway access permits, among others.
S2481 - Directs NJDEP to establish air pollution control general permit for certain cogeneration facilities. S2569 - Establishes "Solar Equipment Purchase and Installation Assistance Program" in NJEDA.
A3519 - Requires site remediation procedures for structures to be used for residential purposes; modifies procedures for structures to be used for child care and educational purposes, and sites previously used for agricultural purposes.
A482 - Revises "Solid Waste Management Act" to eliminate those parts of the statutory law that have been rendered obsolete, unconstitutional or unenforceable by the Carbone, Atlantic Coast and Waste Management v. Shinn decisions.
A3534- Provides that property owner who negligently contaminates or neglects property shall be assessed property taxes at value of property without consideration of effects of contamination or neglect.
A2854 - "The Retrofitted Green Building Tax Credit Act" - 3. a. A taxpayer will be granted a credit for allowable costs associated with retrofitting an existing building to comply with LEED Certification Standards.
Third Circuit Rules Entry of Judgment Against Bankrupt Entity for Cleanup Costs in State Court is Not Barred by the Automatic Stay
The automatic stay is one of the fundamental protections afforded to debtors under federal bankruptcy laws. It provides that once the bankruptcy petition is filed, creditors cannot, among other things, initiate or continue to pursue a lawsuit against the debtor arising from pre-petition acts. One of the principal exceptions to the automatic stay occurs where a state or other governmental unit, in the exercise of its police or regulatory power, commences or continues an action, including the enforcement of a judgment other than a money judgment. In that case, the action is not stayed by the bankruptcy. The Third Circuit recently considered this exception in In re Mystic Tank Lines Corp., 544 F.3d 524 (3d Cir. 2008).
Shortly before Mystic Tank filed for bankruptcy, the State of New York filed a complaint in State Court under the New York Navigation Law against all potential dischargers, including Mystic Tank's predecessor, for damages resulting from discharges at a gas station. Upon filing for bankruptcy, Mystic Tank notified the State, which then filed a proof of claim for the same damages in Mystic Tank's bankruptcy. Mystic Tank, however, never answered the State's complaint, possibly under the assumption that the State's claim would be stayed pursuant to the automatic stay provision, and the State moved for and obtained a default judgment against the debtor in the State Court action.
The Third Circuit affirmed the decisions of the Bankruptcy Court and United States District Court, both of which held that the default judgment fell within the police power exception to the automatic stay. The Third Circuit explained that while a governmental unit cannot enforce a money judgment by a seizure or an attempt to seize a debtor's property, the automatic stay does not prevent a governmental unit from reducing to judgment through litigation its claim against a bankrupt entity for costs incurred in environmental remediation. Therefore, the protection afforded by the automatic stay for debtors facing claims for cleanup costs by governmental units may be limited since a debtor may find itself defending claims for cleanup costs in both bankruptcy court as well as state court.
In November 2008, Mark Mauriello became the head of NJDEP, succeeding former Commissioner Lisa P. Jackson. Prior to the appointment, Commissioner Mauriello, a 28-year veteran of the NJDEP, served as Assistant Commissioner for land use management.
In his new role, Commissioner Mauriello represents the Governor on the Delaware River Basin Commission and is charged with implementing recommendations of the Permit Efficiency Review Task Force, aimed at streamlining the NJDEP's permit review processes and the Site Remediation Reform Act. Thus far, the Department has been focused on streamlining operations and identifying budgetary savings, given the current fiscal climate. Moreover, NJDEP has been instrumental in identifying projects available for stimulus funding in the state.
Administrator Jackson, a 20 year veteran in environmental public service, is the first African American to serve in the position of EPA Administrator. Among her list of priorities are reducing greenhouse gas emissions, improving air quality, managing chemical risks, cleaning up hazardous waste sites and protecting America's waters.