Environmental UPDATE September 2005

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Title:
Environmental UPDATE September 2005
Date:
September 20, 2005
Publication:
The September 2005 Riker Danzig Environmental UPDATE
Author(s):
Marilynn R. Greenberg, Samuel P. Moulthrop, Steven T. Senior, Jeffrey B. Wagenbach
Area(s) of Practice:
Environmental Law
In this Issue

NJDEP Adopts Tough Regulations Under Highlands Act In the Courts

NJDEP

Legislative Action

Superfund Turns 25

Natural Resource Damages

Cool Cities

Climate Change Regulation

NJDEP Adopts Tough Regulations Under Highlands Act

On August 10, 2004, former Governor Jim McGreevey signed into law the controversial Highlands Water Protection and Planning Act, N.J.S.A. 13:20-1 et seq. (the "Act"). The Act establishes a comprehensive, long-term approach to the protection and preservation of drinking water for over half of the residents of the state. The Act's jurisdiction extends across approximately 800,000 acres in portions of Hunterdon, Somerset, Morris, Warren, Sussex, Passaic and Bergen counties (the "Highlands Region"), which is divided into two portions: the "Preservation Area" and the "Planning Area." The Preservation Area consists of approximately 400,000 acres where development will be severely limited, if not prohibited, thereby encouraging development in the remaining Planning Area. The Act calls for strict anti-development and water quality regulations to preserve the Preservation Area and provides for a council to plan development in the Planning Area.

The Act requires that all "major development" in the Preservation Area obtain approval from the New Jersey Department of Environmental Protection ("NJDEP"). This includes (1) any non-residential development in the Preservation Area, (2) any residential development in the Preservation Area that requires an environmental land use or water permit or that results in disturbance of one acre or more or a cumulative increase in impervious surface by one-quarter acre or more, and (3) any capital or other project of a state entity or local government unit that requires an environmental land use or water permit or that results in the ultimate disturbance of one acre or more or a cumulative increase in impervious surface by one-quarter acre or more. Major development does not include agricultural or horticultural activities.

Highlands Council
The Highlands Water Protection and Planning Council ("Highlands Council"), established under the Act, must adopt a regional master plan for the Highlands Region ("Highlands Master Plan") by June 2006. As provided under Section 10(a) of the Act, the Highlands Master Plan's goal is "to protect and enhance the significant values of the resources" in the Highlands Region. The Highlands Master Plan will use zoning rules to determine how many residential units and square feet of commercial development can be transferred from the Preservation Area to the Planning Area. The Highlands Council also has authority to reduce the 25 and 88 acre zoning requirements established under NJDEP's regulations in the Highlands Master Plan. The Highlands Master Plan will be the fundamental land use document for the Preservation and Planning Areas.

Highlands Regulations
The Act requires NJDEP to promulgate rules and regulations to provide environmental standards for development in the Preservation Area to protect water, ecological and cultural resources. On May 9, 2005, NJDEP adopted interim regulations under the Act, which are effective immediately. The new regulations, codified at N.J.A.C. 7:38-1.1 et seq., replace other municipal and state regulations and drastically reduce housing and commercial development in the Preservation Area. Under these rules, a Highlands Preservation Area Approval ("HPAA") must be obtained for all major development within the Preservation Area. The regulations place tough restrictions on septic systems, septic density, and impervious surfaces, and strictly regulate development in upland forested areas, historic and archeological areas, areas with rare, threatened or endangered plants and animals, flood hazard areas, areas on steep slopes and unique or irreplaceable land types. The regulations, however, do provide for limited linear development (e.g. telephone, gas and water lines, etc.) in certain areas.

Septic Systems - The regulations provide tough restrictions on the number of septic systems in the Preservation Area. These regulations, referred to by state officials as the "strictest possible," include provisions for 88-acre zoning in forested lands and 25-acre zoning in "disturbed" areas, which include fields and farmland. Septic systems are required for all new construction, thus permitting only one septic system for every 88 acres in forested lands and for every 25 acres in "disturbed" areas. This zoning provision alone will strictly curtail, if not eliminate, development in the Preservation Area. The regulations also include strict limitations on obtaining new sources of potable water and constructing new wastewater facilities in areas containing environmentally sensitive features.

Septic Density - The Act provides that the waters in the Preservation Area deserve the highest level of water quality protection. Therefore, the regulations provide tough restrictions on septic density. The regulations impose Category One anti-degradation policies for septic density to protect existing water quality. Category One anti-degradation policies are the most stringent under the Surface Water Quality Standards which are intended to protect the water quality of waterways designated in New Jersey for their exceptional ecological significance, exceptional water supply significance, and exceptional recreational significance or because of exceptional shellfish or fisheries resources. NJDEP asserts that limiting septic density will achieve these anti-degradation standards.

Impervious Surfaces - NJDEP will not approve any development within the Preservation Area that will result in impervious surfaces greater than 3% of the land area of the lot. The regulations define "impervious surface" as "any structure, surface, or improvement that reduces or prevents absorption of stormwater into land, and includes porous paving, paver blocks, gravel, crushed stone, decks, patios, elevated structures, and other similar structures, surfaces, or improvements." N.J.A.C. 7:38-1.4.

Upland Forested Areas - The regulations require a HPAA for any activity, except linear development, which disturbs upland forest located on a slope greater than 10%. The regulations define "upland forested area" to mean "a biological community that is a ‘forest' and that is not a Highlands open water." N.J.A.C. 7:38-1.4. The regulations provide a method for scoring areas to determine if the area is considered an upland forested area. This scoring includes examination of the number, size and density of trees. Mitigation is required for the total acreage of any disturbed area allowed under a HPAA.

Historic and Archaeological Areas - The regulations provide a thorough application process for any proposed development at historic or archaeological properties that are listed or eligible to be listed on the New Jersey or National Register of Historic Places. Development is prohibited if it would have an impact on these historic or archaeological areas.

Endangered Plants and Animals - The Highlands regulations make it nearly impossible to develop areas containing endangered plants or animals. The regulations prohibit activity that will jeopardize the continued existence or is likely to destroy or adversely modify the habitat of any rare, threatened or endangered plant or animal.

Flood Hazard Area - The regulations impose specific requirements for major development within flood hazard areas that restrict the displacement of flood storage volume to no more than 20%.

Steep Slopes - The regulations prohibit development on steep slopes with gradients of 20% or more and severely restrict building on slopes with gradients of 10% to 20%. Unique or Irreplaceable Land Types and Existing Scenic Attributes - The regulations will not permit any activity in these areas unless the activity "would result in minimum practicable degradation" to the area or within the immediate area of the proposed activity. N.J.A.C. 7:38-3.12(d). The regulations define "existing scenic attributes" to include "any state, county or municipal parks, forests, wildlife management areas, natural areas, any areas acquired for recreation and conservation purposes with Green Acres funding … and other areas as identified by the Highlands Council." N.J.A.C. 7:38-3.12(c). Areas protected under these provisions include vernal habitats and ecological communities identified in the Natural Heritage Database.

Linear Development - Linear development is permitted in certain areas of the Preservation Area where other activities are prohibited. For instance, only linear development is permitted within a Highlands open water or its buffer. "Linear Development" is defined as "infrastructure, utilities and the rights-of-way therefore, such as sewerage and stormwater management pipes; gas and water pipelines; electric, telephone and other transmission lines; and the rights-of-way therefore." N.J.A.C. 7:38-1.4. It does not include residential, commercial, office, or industrial buildings, improvements within a development such as utility lines or pipes, or internal circulation roads. Id. Linear development includes driveways. The regulations require an alternatives analysis for all linear development. Although the regulations do not explicitly limit the length of the disturbance, mitigation is required for all disturbances regardless of the length.

Limited Exemptions - The regulations do provide for certain limited exemptions. Single family homes constructed as of August 10, 2004 for landowners' or their immediate relatives' own use are exempt from the zoning and other Highlands rules. All other Preservation Area projects are subject to the regulations unless they fall within one of the seventeen exemptions provided under the Act, including construction of a single family dwelling for one's own use, a major Highlands development that received either Municipal Land Use Law approval or certain NJDEP permits prior to March 29, 2004, improvement to an existing single family home or place of worship, routine maintenance of state transportation or infrastructure systems, routine maintenance of public utility systems, mining activities for facilities existing on June 7, 2004, site remediation activities and certain Mount Laurel projects.

Because of the complexity of the regulations, NJDEP urges developers and land owners in the Highlands Region to obtain a Highlands Resource Area Determination ("HRAD") prior to applying for any permits under the regulations. HRAD governs whether a particular piece of land can be developed and, if so, to what extent, and which regulations are applicable to the parcel. It is a study that concentrates on a detailed map of a particular parcel and describes the parcel's features, including water sources, possible historical sites and threatened or endangered species.

Fees and Fines
Obtaining a HRAD determination is costly. The basic fee begins at $750, plus an additional $100 for each acre of land studied. The determination is good for five years and can be renewed after five years for at least $250. The regulations also permit NJDEP to assess hefty fines and fees. A state building permit will cost $2,500 plus $50 per acre. This fee will be greater if the applicant did not first obtain an HRAD. There is a $200 annual water use registration fee, $2,000 fee for stormwater calculation and $4,000 for each stream encroachment permit. NJDEP also charges a $1,000 fee if, due to an applicant's mistake, NJDEP is forced to conduct an additional site visit of the property. There is a $2,000 fee associated with requesting a waiver under the regulations. Violations of the rules face fines as high as $25,000. NJDEP claims that the additional fees will fund staff costs associated with enforcement of the regulations.

Waivers
Although most developments must meet all regulations, there is a waiver provision to allow minimal construction to avoid "the taking of property without just compensation." However, to qualify for this waiver, a property owner must prove that he has attempted to transfer the development rights to the property or sell the property and is suffering economic loss. NJDEP can also grant a waiver for the redevelopment of certain NJDEP designated brownfields sites.

To determine if a property is located within the Highlands Region, an applicant can visit NJDEP's website at http://www.state.nj.us/dep/highlands/ and click on i-MapNJ to view an overlay of the Highlands Region.

The interim rule is effective as of May 9, 2005. The current regulations will be subject to a 45-day comment period in which the NJDEP and Highlands Council will consider changes. After the end of the comment period, NJDEP anticipates filing a proposal to readopt these rules with amendments based on its consultations with the Highlands Council and other state offices. The final rules are anticipated to be in place in a year after the Highlands Council passes the Highlands Master Plan.

In the Courts

Supreme Court Holds Absolute Pollution Exclusion Applies Only to Traditional Pollution Events
The Supreme Court held that the absolute pollution exclusion in insurance policies, which purports to bar coverage of all pollution related events, is limited to "traditional environmental pollution claims" and does not bar coverage for personal injury claims allegedly caused by exposure to toxic fumes from floor coating/sealing operations or similar non-traditional pollution claims. Nav-Its, Inc. v. Selective Ins. Co., A-20/21-04 (Sup. Ct., April 7, 2005). Examples of traditional environmental harms include damage that requires the remediation of pollutants in soil or water (i.e., a leaking underground storage tank). Non-traditional environmental harms, on the other hand, can include exposure to toxic fumes from construction issues, chipping lead paint, carbon monoxide poisoning from a faulty furnace and, potentially, mold exposure.

In its analysis of the absolute pollution exclusion, the New Jersey Supreme Court revisited its logic from the Morton Int'l., Inc. v. General Accident Ins. Co., 134 N.J. 1 (1993) case and relied on the doctrine of reasonable expectations and the principle of fundamental fairness to hold that carriers cannot apply the absolute pollution exclusion to non-traditional pollution claims. Recounting the history of the pollution exclusion clause, the court found that the insurance industry did not accurately portray the intended effect of the exclusion in the regulatory approval process. Insurance companies cannot seek approval of an exclusion that restricts coverage "for the asserted reason of avoiding catastrophic environmental pollution claims and then use that same clause to exclude coverage for claims that a reasonable policyholder would believe were covered by the insurance policy." Most other jurisdictions that have decided the issue have also limited application of the absolute pollution exclusion to traditional environmental claims (specifically California, Illinois, Massachusetts, Ohio, New York and Washington). The Supreme Court recognized a conflict in Appellate Division cases and stated that the absolute pollution exclusion clause as presently approved is limited to traditional environmental pollution and the Court disapproves any contrary view expressed in our case law.

Covenant of Good Faith and Fair Dealing is Alive and Well in Real Estate Contracts
The New Jersey Supreme Court has affirmed the covenant of good faith and fair dealing, which requires parties to a contract to refrain from doing "anything which will have the effect of destroying or injuring the right of the other party to receive" the benefits of the contract. Brunswick Hills Racquet Club, Inc. v. Route 18 Shopping Ctr. Associates, 182 N.J. 210 (2005). Brunswick Hills involved a commercial tenant, operating under a 25-year lease which contained an option to purchase or create a 99-year lease upon termination of the original lease term. To exercise the option for the long-term lease, the tenant was required to both give notice and tender a fixed sum of money to the landlord by a specified date. The tenant timely notified the landlord of its intent to exercise the option 19 months in advance of the contractual deadline. The tenant, however, failed to make the up-front payment necessary to perfect the option, believing that the payment was required only at the time of closing of the new lease. The tenant repeatedly asked to set a closing date, a request evaded by the landlord, who never pointed out the tenant's failure to make the required payment.

After a 19-month period of these communications, the landlord declared that the option had become null and void. The tenant brought suit to enforce the option. The Supreme Court, agreeing that the tenant did not comply with the option terms, also recognized that the strict terms of the agreement could not be ignored. However, finding that the landlord breached the implied covenant of good faith and fair dealing by its actions which "lulled" the tenant into inaction, the Court refused to enforce the option terms.

Town May Condemn Land to Preserve It as Open Space
The Appellate Division in a recent decision held that a municipality may use the eminent domain process to obtain land intended for residential development for open space. Mount Laurel Township v. Mipro Homes, Docket Nos. A-6676-02T1, A-3201-03T1 (App. Div. August 2, 2005). Mipro Homes owned 16.3 acres of land for which it had subdivision approval to develop with 23 single family homes priced between $400,000 and $450,000. Mt. Laurel, however, brought a condemnation action intending to preserve the land as open space. Mipro contested the condemnation arguing that Mt. Laurel's purpose in condemning the land was to stop residential development and that this was an unlawful purpose. The Appellate Division, however, found that State law and policy confer authority on municipalities to acquire land by eminent domain for the preservation of open space. Moreover, conservation of land is a public use and the municipality need not establish that it intends to put the land to active or recreational use. Finally, even if the municipality is motivated by an attempt to curb development, the Appellate Division found that such a motivation does not constitute fraud, bad faith or manifest abuse that would overturn Mt. Laurel's eminent domain efforts, especially since Mipro's planned development was for upper-income families which did not carry a significant public interest (such as low-income housing or assisted living facilities).

Condemnation Permissible to Promote Economic Development
The United States Supreme Court has affirmed the power of municipalities to condemn private property to promote economic redevelopment. Kelo v. City of New London, No. 04-108 (June 23, 2005). The City of New London approved a municipal redevelopment plan designed to create new jobs and generate tax revenues. The City's redevelopment agency sought to condemn fifteen residential properties, many of which were owner-occupied and none of which were blighted or deteriorated. Under the redevelopment plan, the City would transfer the properties to a private developer to be used as part of a larger development for office space and a state park or marina. The Supreme Court held that the exercise of the power of eminent domain for economic redevelopment does not violate the requirement of the Takings Clause of the Fifth Amendment that property may be taken only for public use. Although the Court found economic redevelopment to be a permissible public purpose for condemnation, the Court noted that state legislatures may restrict the states' exercise of this power. Since the Kelo decision, many state legislatures have responded, introducing legislation in New Jersey and elsewhere to prohibit the taking of property for economic redevelopment.

Aviall Decision Limits the Ability of Private Parties to Sue for Contribution Under CERCLA
In its landmark decision in Cooper Industries, Inc. v. Aviall Services, Inc., 125 S. Ct. 577 (2004), handed down on December 13, 2004, the United States Supreme Court surprised the business community by significantly limiting the circumstances under which a private party may sue for contribution under the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"). There are generally two recognized causes of action a private party may bring under CERCLA: cost recovery, under § 107(a) and contribution, under § 113(f)(1). After Aviall, whether a private party has access to these two causes of action will depend on whether it is an innocent party or a potentially responsible party ("PRP"), and whether it has satisfied any liability it may have to the government.

The holding in Aviall provides that a private party that has not settled its liability to the government under § 106 or § 107(a) of CERCLA may not obtain contribution from other responsible parties under § 113(f)(1). Aviall at 580. The Court refrained from deciding whether it would recognize a third potential claim, that of an implied right of contribution under § 107. The Court did point out that it has "refused to recognize implied or common-law rights to contribution in other federal statutes," and further noted that Congress provided an express cause of action for contribution under § 113(f)(1) when it amended CERCLA in 1986. Aviall 580, 581-2. Thus, the Court in Aviall found that CERCLA provides a right of cost recovery under § 107(a) and, only when a PRP has satisfied its liability to the government, a separate right of contribution under § 113(f)(1). Id. Aviall did not decide, however, whether a third cause of action, that of an implied right to contribution, is available under § 107(a).

NJDEP

NJDEP Issues Vapor Intrusion Guidance
Vapor Intrusion, or VI, is the current "hot topic" in site remediation. The federal and state environmental protection agencies increasingly are requiring parties conducting remediation to evaluate whether contaminant vapors are a threat to public health. In June 2005, NJDEP issued long-awaited draft guidance on the investigation, evaluation and remediation of VI. New York and Pennsylvania also have taken steps to require the VI exposure pathway to be evaluated at contaminated sites.

VI is the migration of volatile contaminants from the ground water or soil into the indoor air in overlying buildings. NJDEP's draft guidance -- which is approximately 300 pages -- includes a tiered approach to sampling, evaluation, and remediation of VI. It also provides guidance on the evaluation of background contamination, an important factor in evaluating VI, and the need to conduct community outreach where appropriate. NJDEP has developed screening level concentrations for contaminants in ground water, indoor air and soil gas, as well as Immediate Action Levels ("IAL") requiring prompt remedial action. For example, the IAL for the common contaminant trichloroethene is 3 ug/m3 in air, which is at or below background levels in some locations. The public was invited to comment upon the guidance until August 8, 2005.

Any party remediating a site contaminated with volatile organic compounds should be aware of the potential for VI. NJDEP increasingly will require more significant efforts to evaluate and, as necessary, remediate VI at many contaminated sites.

NJDEP Adopts Air Pollution Rules to Comply With Grace Period Law
On May 16, 2005, NJDEP readopted the Air Administrative Procedures and Penalties Rules, N.J.A.C. 7:27A et seq., with amendments to identify violations as either minor or non-minor for the purpose of providing grace periods in accordance with the Grace Period Law, N.J.S.A. 13:1D-125 et seq. The Grace Period Law, enacted on December 22, 1995, requires NJDEP to designate certain types of regulatory violations under numerous environmental statutes, including the Air Pollution Control Act, N.J.S.A. 26:2C-1 et seq., as either minor or non-minor. Under the Grace Period Law, any person responsible for a minor violation is afforded a period of time, known as a "grace period," to correct the violation. If the minor violation is corrected as required, then NJDEP will not assess a penalty. In those cases where a violation is not corrected within the grace period, NJDEP may pursue enforcement action in accordance with its statutory authority, including, but not limited to, the assessment of penalties.

Among the changes in the new rules is the addition of the definition of "emission increase," which refers to a release of certain types or amounts of air contaminants above what is allowed by permit or regulation. Because the rules promulgated under the Air Pollution Control Act are intended to control air pollution, and the release of air contaminants contributes to that pollution, NJDEP will not consider any violation that results in an emission increase as a minor violation for the purposes of establishing any grace period. The result is that under the new rules, only violations of an administrative nature will be afforded a grace period.

i-MapNJ Update
DEP's environmental mapping tool, known as "i-MapNJ," has several new features. Of particular interest is the addition of a new data layer to address the Highlands Region. This feature enables one to determine whether a particular property is located within the Highlands Region and, if so, whether it is within a "planning" or "preservation" area, simply by plugging in the address. Other updated GIS data layers include Landscape Data (which is now version 2.0), Legislative Districts, Congressional Districts, Groundwater Contamination Areas and Soils. Check it out at
http://www.state.nj.us/dep/gis/newmapping.htm.

DEP Environmental Excellence Awards
It's that time of year again so get your applications ready! 2005 marks the sixth year of NJDEP's Environmental Excellence Awards Program, recognizing outstanding environmental performance, programs and projects throughout New Jersey. The program is co-sponsored by the New Jersey Corporation for Advanced Technology and the New Jersey League of Municipalities. Nominees may include individuals, organizations or businesses, and self-nomination is permitted. Candidates will be judged on such criteria as the environmental benefit of the program or project, the demonstration of leadership and innovation in the environmental field, the success of environmental education and outreach, and the means by which the program or project achieves the environmental goals of the State, to name a few. To be eligible, a nominee must be located within New Jersey and must agree to have the project or program shared with others. The 2004 winner of the Environmental Excellence Award was Mannington Mills, Inc. of Salem County, a producer of residential and commercial flooring products, recognized for implementing a number of clean air initiatives, including switching from solvent-based to water-based inks. All applications must be received by the close of business on September 16, 2005. For more information and applications, go to http://www.state.nj.us/dep/ eeawards/index.html. Good Luck!

NJDEP Steps Up Enforcement of Idling Vehicles
In March 2005, NJDEP announced an initiative to target school buses for enforcement of regulations at N.J.A.C. 7:27-14(a), prohibiting diesel-powered vehicles from idling for more than three consecutive minutes when not in motion. Previous initiatives have targeted charter buses, long-haul trucks and short-haul delivery trucks.

Although regulations prohibiting the idling of diesel-powered vehicles have been in effect for more than a decade, NJDEP's increased enforcement activities are part of a statewide effort to reduce particulate emissions caused by diesel exhaust. Failure to comply with idling standards may result in the assessment of civil administrative penalties from vehicle operators, ranging from $200 to $3,000 per offense. Property owners also will be subject to enforcement action if a vehicle operator is cited on their property. "No-Idling" signs are available for purchase from NJDEP's Diesel Risk Reduction Team. Contact Melinda Dower at (609) 292-1122 for more information.

NJDEP to Release Updated Version of the Known Contaminated Sites Report
NJDEP is scheduled to release the updated version of the Known Contaminated Sites in New Jersey report during Summer/Fall 2005. The report identifies sites with confirmed contamination of soil and/or ground water. The information is presented by county and makes distinctions between sites with on-site sources of contamination, sites with unknown sources of contamination, and sites where remedial work has been completed but institutional controls, such as classification exception areas or deed notices, remain. The last version of the report was released in 2001 and contained information on over 12,500 sites.

Legislative Action

New Laws Afford Increased Liability Protection
In January, Acting Governor Codey signed Assembly bill A-2444 into law (P.L. 2005, c.3), providing liability protection for natural resource damages ("NRD") and off-site contamination to qualified developers of brownfield sites. The law clarifies that there is no NRD liability to persons who acquire such property after 1997, after a hazardous discharge has occurred at the site, provided the person is in no other way responsible for the discharge, is not a corporate successor to the discharger, and has not agreed contractually to assume liability for NRD compensation. In addition, in order to be eligible for protection from liability for contamination that has migrated off-site, it must be demonstrated that the off-site contamination stems from multiple sources and does not pose a public health or environmental risk if not remediated.

The new law also amended the statute of limitations for the State to bring NRD claims. As amended, the State has four (4) years from January 1, 2002 or from the completion of a Remedial Investigation ("RI") of the contaminated site, whichever comes later, to file an NRD suit.

P.L. 2005, c.43, enacted in March, provides an exemption from cleanup liability pursuant to the Spill Act at Superfund sites in New Jersey if the discharged substance consisted of municipal solid waste and originated from a residence, small business, (under 100 full-time employees) or a tax-exempt organization with fewer than 100 full-time workers, or for de minimis amounts of material (less than 200 lbs. of solid material or 110 gallons of liquid waste).

Air Toxic Repeal Legislation Signed
Legislation to repeal the tax that was imposed last year on the annual emission of air toxics was signed by the Acting Governor on July 7th. The final version of the legislation combined bills S-2124/2385 and A-3667/3836. Senator Joseph Doria, one of the sponsors of the bill, called the surcharge "unfair and overly harsh on manufacturers" and stated that "there were enforcement difficulties with it."

Governor Signs MTBE Ban
A ban on the sale of gasoline containing the fuel additive MTBE (methyl tertiary butyl ether) was signed by Acting Governor Codey on August 18th. The additive initially was introduced to reduce air pollution from automobiles and other gasoline-powered engines. Its use was mandated by the 1990 Clean Air Act, but later it was found to be a contaminant, frequently leaking into the soil and groundwater. Gasoline retailers will be prohibited from selling gasoline containing more than .5 percent MTBE beginning in January 2009.

The "Recycling Enhancement Act," A-4075, introduced in May, and a companion bill, S-2615, introduced in June, would impose a recycling tax on solid waste generation in order to fund county and local recycling programs. The tax would be levied on every solid waste collector at the rate of $3.00 per ton on all solid waste collected from solid waste generators. The revenues, estimated to be $34 million per year, would be deposited in the State Recycling Fund, administered by NJDEP. Sixty percent of the money would be used for direct recycling grants to municipalities or counties; the remainder would be used for other recycling projects, including public education.

A-4089, also introduced in May, and its companion S-2621, introduced in June, require that the existence of environmental contamination be considered in determining the fair market value of property in condemnation proceedings. This measure would effectively undo the New Jersey Supreme Court's approach to the valuation of contaminated property in condemnation as stated in Housing Authority of City of New Brunswick v. Suydam Investors, L.L.C., 177 NJ 2 (2003), in which the Court held that condemned contaminated property is to be valued as if it has been remediated. The bills currently reside in committee in their respective houses.

The application deadline for financing from the Petroleum Underground Storage Tank Remediation, Upgrade and Closure Fund for closure and associated remediation of regulated underground storage tanks ("USTs") would be extended by the provisions of S-2479, introduced in May. This bill would extend the deadline from June 30, 2005 to June 30, 2008. The Senate passed the bill in June and it currently is in the Assembly Environment and Solid Waste Committee.

S-2578, the "Preservation of Landfill Space Act," would require every rigid plastic packaging container manufactured, sold or offered for sale in New Jersey or bearing a product that is sold or offered for sale in this state to be composed of at least 25% recycled content by January 1, 2006, with higher percentages phased in over the following 10 years. There are exceptions for packaging used with food, drugs or cosmetics. The bill was introduced in May and referred to the Senate Environment Committee, where it remains. It is strongly opposed by the "Plastics Recycling Coalition" which claims the legislation will require changes in the manufacturing process, leading to higher consumer costs, and that it could weaken the integrity of the packaging.

S-2708, introduced in June, would create a Soil Remediation Advisory Task Force and prohibit the adoption of soil remediation standards until the task force issued recommendations. The measure currently is in the Senate Environment Committee.

Criminal Trespass Law Amended to Protect Certain Facilities
On June 15, 2005, amendments to the criminal trespass statute, N.J.S.A. 2C:18-3, were enacted to upgrade from a disorderly persons offense to a crime of the fourth degree the act of trespassing at any power generating facility, waste treatment facility, public sewage facility, water treatment facility, public water facility, nuclear electric generating facility, or any facility which stores, generates or handles any hazardous chemicals. A crime of the fourth degree is punishable by a term of imprisonment of up to 18 months and/or a fine of up to $10,000. Prior to this amendment, only the act of trespassing at schools, research facilities or dwellings was a crime of the fourth degree.

Superfund Turns 25!

This year marks the 25th Anniversary of Superfund. On December 11, 1980, President Jimmy Carter signed into law the new Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA") to locate, investigate and remediate the worst contaminated sites nationwide. CERCLA, or "Superfund," as we commonly know it, is administered by the EPA in cooperation with individual states and tribal governments. According to EPA, since the inception of Superfund, hundreds of hazardous waste sites nationwide have been cleaned up. As of May 2005, 933 sites throughout the country have been declared complete, 58 of which are located in New Jersey. To celebrate this milestone anniversary, EPA is planning three major projects: an oral history project, a photo history project and a national discussion on the changing nature of Superfund. EPA will be selecting two photos from each of its ten regions to enhance the oral history project. Photos can be submitted to EPA for consideration in five categories: People and Places; Emergency Response; Use of Technology; Reuse/ Redevelopment; and Before and After. For more information, including guidelines for photograph submittal, visit: http://www.epa.gov/superfund/25anniversary/photo/index.htm

Update on Natural Resource Damages

Almost two years after NJDEP announced it would seek to recover natural resource damages ("NRD") at up to 4,000 contaminated sites, the impact of the State's NRD initiative is still uncertain. A number of high profile NRD settlements have been obtained and law suits have been filed by the state and its private-sector lawyers. At many contaminated sites, the threat of NRD has not materialized. This could change in the future, however, as NJDEP plans to propose regulations on NRD before the end of the year.

NJDEP recently announced that it has obtained approximately 375 NRD settlements during Commissioner Campbell's tenure, with approximately $50 million recovered since the program started and over 2,000 acres of land protected or restored. Many of these settlements are in the $50,000 range - roughly corresponding to a 1 acre plume of contaminated ground water. The vast majority of settlements have consisted of a payment to the state, however, rather than a restoration project conducted by the responsible party.

Significant recent settlements include a $3 million settlement by International Matex Tank Terminals for its tank terminal in Bayonne and a $600,000 settlement by W.R. Grace and Hatco Corp. for a site in Woodbridge. Restoration and preservation projects are part of these settlements. E.I. DuPont de Nemours and Company also has settled NRD claims for groundwater at eight sites, including preservation of 1,875 acres of land, planting of 3,000 trees in urban areas, and payment of $500,000 for water restoration projects and a boat ramp.

In settlement of litigation commenced by New Jersey trade groups, NJDEP has announced that it will propose rules on NRD. The rules will address, among other things, the agency's preference for restoration projects rather than monetary NRD payments; "scaling" or correlation of NRD restoration projects to natural resource injury; "short-form" methods to assess NRD; the role of use and "non-use" values in calculating claims; and a "limited ability to pay" exemption from NRD and other situations where litigation or other costs of recovery may exceed the NRD claim. The rule-making, to be initiated before the end of the year, will provide an administrative forum, subject to judicial review, to present technical, policy, and legal arguments on NRD claims.

Other developments include new legislation (A-2444) that provides qualified developers liability protection against NRD claims and amends the accrual date for the statute of limitations. Qualified developers must have acquired the property on or after January 6, 1998, and after any discharge of a hazardous substance occurred. The developer cannot be responsible for the discharge or be a corporate successor to the discharger or any other liable person. The liability protection does not apply to anyone that expressly and contractually assumes responsibility for NRD. The statute of limitations now will run four years after January 1, 2002 or the completion of the remedial investigation ("RI") of the contaminated site, whichever is later. At sites where the RI was completed prior to January 1, 2002, the statute of limitations will expire at the end of this year.

"Cool Cities" Initiative

In 2003, New Jersey launched its "Cool Cities" Initiative to plant 100,000 trees within urban areas such as Newark, Elizabeth, Orange, Union and Passaic. Under this program, thousands of trees have been planted in urban areas throughout the state. The planting of trees is intended to address the fact that the air temperature in cities often exceeds the temperature in non-urban areas by five to ten degrees Fahrenheit, a phenomenon referred to as an "urban heat island." This additional heat can contribute to smog and exacerbate health problems such as asthma and exhaustion. Trees decrease the air temperature by as much as six to nineteen degrees Fahrenheit through the process of "evapotranspiration," whereby leaves excrete water which then removes heat from the air as the water evaporates. Trees also have the additional benefit of absorbing sound, decreasing erosion and improving air quality. Economic benefit is in part derived from decreasing energy costs due to lower ambient temperatures and improved water quality.

The New Jersey Tree Foundation has a similar program entitled "Urban Airshed Reforestation Project" and provides free trees to those who agree to: a) plant trees on public lands, b) use and train volunteers for the planting and c) maintain the trees for at least two years. The Foundation offers a program every fall entitled "Make a Difference with Trees," at which time it provides a free workshop and manual. Anyone interested in learning more or participating in this program may contact: Carrie Magee at (609) 984-3866 or the Foundation's general line at (609) 984-3856.

Climate Change Regulation is Up in the Air

The future of climate change regulation remains uncertain. Recent developments at the federal and state levels point in different directions. Yet given all the attention directed to global warming and climate change during this sweltering summer, strong state regulatory initiatives increasingly are more likely.

At the federal level, a three-judge panel of the U.S. Court of Appeals in the District of Columbia announced recently that the U.S. Environmental Protection Agency ("EPA") acted properly when it rejected a petition to regulate carbon dioxide and other greenhouse gases, which give rise to global warming. Commonwealth of Massachusetts, et al. v. Environmental Protection Agency, 2005 WL 1653055 (July 15, 2005). Perhaps reflecting the disparate range of views on climate change and global warming, each of the three judges issued a separate opinion, with two judges upholding EPA's action but for different reasons, and the dissenter determining that EPA misinterpreted the Clean Air Act to reject the petition. Given the split decision, petitioners are likely to seek a re-hearing before the full Court of Appeals or review by the U.S. Supreme Court.

Congress touched upon global warming and climate change this summer. The Senate voted 60-38 to reject legislation proposed by Senators John McCain (R-Ariz.) and Joseph Lieberman (D-Conn.), known as the Climate Stewardship Act, that would require U.S. industry to make sharp cuts in emissions of greenhouse gases over the next five years. At the same time it rejected this legislation, the Senate approved a "sense of the Senate" resolution stating that Congress should enact mandatory, market-based limits on greenhouse gas emissions. The resolution has no binding effect, but winds of change are in the air and a more robust climate change debate may yet come before Congress.

In New Jersey, NJDEP proposed regulations in October 2004, laying the groundwork to curb emissions of the greenhouse gas carbon dioxide ("CO2") regionally and within the state.

Riker Danzig assisted business and industry trade organizations to review and comment upon NJDEP's proposal to regulate CO2. Although the agency has been quiet about the proposed regulations since the comment period closed in January 2005, NJDEP continues to participate in the Regional Greenhouse Gas Initiative ("RGGI"), a consortium of nine northeastern states. RGGI has just announced a first-of-its-kind plan to reduce emissions of greenhouse gases from six hundred (600) electric power plants. California, Oregon, and Washington are said to be negotiating a similar pact.

Given all the rhetoric and hot air surrounding the climate change debate, continuing calls for more aggressive efforts to address greenhouse gas emissions are likely. States are forging ahead with regulatory initiatives in the absence of strong action by the federal government. Electric utilities, manufacturers and consumers of electricity should prepare for a patchwork of regulation that may develop in the states.