In 1993, NJDEP promulgated the Oversight Regulations, in order to codify its longstanding practices of 1) requiring Memoranda of Agreement (MOAs) for NJDEP review of voluntary cleanups of low and moderate priority sites; 2) requiring Administrative Consent Orders (ACOs) for responsible party remediations of high priority sites; and 3) assessing oversight fees for its review of all remediations, including those conducted pursuant to ISRA. The Appellate Division of the New Jersey Superior Court recently upheld the Oversight Regulations with some minor modifications in E.I. duPont de Nemours v. NJDEP on August 1, 1995.
Principally, the Appellate Division upheld NJDEP's right to assess oversight fees for all site remediations. However, it required the agency to modify its formula for calculating those fees in some respects and provide clarification of certain items that NJDEP includes in the assessment. Currently, the oversight fees are calculated pursuant to a convoluted formula that can result in a responsible party paying oversight fees for each hour that an NJDEP employee spends on a case in an amount equal to more than three and one-half times the hourly rate of that employee. The Appellate Division's modification of the formula should result in somewhat decreased oversight fees for responsible parties.
In upholding NJDEP's authority to require MOAs and ACOs, as well as the terms that typically are included in the ACOs, the Appellate Division stated that an ACO does not provide NJDEP with a "blank check" because a responsible party always has the right to challenge NJDEP's decisions, including assessment of stipulated penalties and oversight fees, in an enforcement action brought by NJDEP. In other words, if the responsible party takes issue with any NJDEP action, it can refuse to comply with NJDEP's orders or refuse to pay the assessed penalties or oversight fees, wait for NJDEP to bring a civil action seeking compliance, and raise its objections as defenses in that action. Anyone who has been a party to an ACO knows of the risks associated with the accumulation of stipulated penalties and the possibility of treble damages, and the likelihood that a court will uphold NJDEP's actions. Consequently, the right of review is illusory and rarely exercised. In effect, this case has reinforced the regulated community's view of the ACO as a "blank check."
Because the Oversight Regulations apply to all remediations conducted in New Jersey under NJDEP supervision, this case is important in determining the rights and obligations of NJDEP and the regulated community with respect to those cleanups.
