Appellate Court Finds Responsible Party Cannot Rely Upon Previous NFA Letters for Current ISRA Compliance

Appellate Court Finds Responsible Party Cannot Rely Upon Previous NFA Letters for Current ISRA Compliance
Riker Danzig Environmental Update May 2017

The New Jersey Appellate Court recently found that a responsible party cannot rely solely upon previously issued No Further Action (“NFA”) letters from the NJDEP when complying with a new trigger under the Industrial Site Recovery Act (“ISRA”). Drytech, Inc. v. New Jersey Department of Environmental Protection, 2016 WL 7474392 (App Div., Dec. 29, 2016). The Court in Drytech explained that with the passage of the Site Remediation Reform Act (“SRRA”), a party, when complying with ISRA, is required to hire a Licensed Site Remediation Professional (“LSRP”) to exercise independent judgment and identify and obtain whatever data and other information the LSRP deems is necessary to support the issuance of a Response Action Outcome (“RAO”). 

The plaintiff in Drytech owned and operated a manufacturing facility that triggered compliance with ISRA on four separate occasions, in 1998, 2001, 2002 and 2013. With respect to the ISRA triggers in 1998, 2001 and 2002, Plaintiff identified and addressed contamination at its property and received NFA letters from the NJDEP stating that no further action was necessary and Plaintiff was in compliance with ISRA. The NFA letters also contained a covenant by the NJDEP not to sue Plaintiff with respect to the remediation conducted. The 2013 ISRA trigger, however, occurred after the implementation of the SRRA that now requires an entity subject to ISRA to hire an LSRP to issue an RAO for the site. Plaintiff, not wanting to hire an LSRP, argued that it was not subject to SRRA because it could rely upon previous NFA letters for ISRA compliance since no new areas of concern were identified for the site. On this basis, Plaintiff sought a “waiver” from the NJDEP of the SRRA requirements. 

Prior to requesting the waiver, Plaintiff contacted several LSRPs and was advised by each that they could not issue an RAO without “completely re-investigating” the site, including the previous remediation work conducted in connection with the NFA letters, at a cost in excess of $12,000. Plaintiff, concerned about the expense of a re-investigation and believing that the NFA letters resulted in compliance with ISRA and were binding on the LSRP, asked the NJDEP for a “waiver” of the requirement to retain an LSRP to issue an RAO for the site. Because the NJDEP did not immediately respond to Plaintiff’s request, Plaintiff filed a declaratory judgment action seeking a court decision that a waiver was appropriate. In turn, the NJDEP moved to dismiss Plaintiff’s complaint asserting that Plaintiff failed to state a claim. 

The trial court granted NJDEP’s motion finding that there was no authority for Plaintiff’s waiver request. The trial court explained that the SRRA requires an assessment by an LSRP of Plaintiff’s property and “previous determinations under a prior law are not binding on an LSRP’s determination under new laws.” Moreover, the court found that an LSRP is required to exercise independent professional judgment when issuing an RAO for a site, which includes assessing the data and information necessary to support the RAO. Plaintiff appealed the trial court decision and the Appellate Court upheld the dismissal. The Appellate Court explained that the SRRA required an LSRP to conduct a detailed review of the site and did not allow the NJDEP to waive this requirement based on prior compliance with ISRA. Consistent with the trial court decision, the Appellate Court found that the SRRA imposes new obligations on Plaintiff with which Plaintiff must comply. The Court also stated that the covenants not to sue in the NFA letters did not relieve Plaintiff of its obligations to comply with future laws and regulations. 

The Drytech decision clarifies that a responsible party cannot rely upon a previous NFA letter to provide current ISRA compliance. It also confirms that an LSRP has an obligation to exercise professional judgment and determine what is necessary to support the issuance of an RAO. Some may construe Drytech to impose additional obligations on a party that previously obtained closure for a site through an NFA letter. But it is more reasonable to interpret Drytech for the simple proposition that in order to comply with ISRA for a new transfer of ownership or other trigger, a responsible party must hire an LSRP to conduct a thorough investigation of a site, including a review of prior NFA letters, before issuing an RAO.